IBM Corp. is preparing a full-scale assault on Microsoft Corp.'s primary profit centers, its loyal base of programmers and its growing foothold in the server arena.

Top on the list is a direct attack on Office 97, which analysts and IBM insiders consider Microsoft's cash cow. IBM's Lotus Development Corp. is embarking on a plan to gain market share with its upcoming Kona Java applet suite, even if it means making "noneconomic decisions" in the short term, said Lotus President Jeff Papows.

"If push comes to shove and I need to vividly demonstrate to the marketplace what can be done with Java, we won't underwhelm that opportunity for short- term economic reasons," Papows said. "IBM is generating about $4 of hardware and services revenue for every $1 of Lotus product revenue."

Papows told Comdex/Spring attendees that Lotus, Cambridge, Mass., will deliver the Java applet suite in October. The product is aimed at putting pressure on Microsoft's Office suite, said Papows, which he estimates generates 60 percent of Microsoft's profits. He said Lotus' secondary position in the office suite market paves the way for the company to "turn the applecart upside down."

A base desktop version of the suite for network computers will include mainframe emulation capability, a Notes-based Java mail agent, calendaring and scheduling, and a number of file-transfer capabilities.

That base system will be OEMed to network computer manufacturers, said Papows. The more traditional suite, which will contain productivity applets such as a spreadsheet, text editor, a drawing program and chart capability, will go through traditional channels, he said.

The Java "applets" pare down the functionality from fatter productivity suites into bite-size chunks. Instead of buying a full spreadsheet or suite, the user buys a calculation engine, for example. Because they are written in the Java programming language, the applets ostensibly will run on several platforms-not just Windows, an added advantage for programmers seeking to develop for the largest possible installed base.

Lotus previewed a set of productivity applets under the Kona code name at January's Lotusphere conference in Orlando, Fla.

But this is hardly Lotus' first shot in the price war. Average price for upgrades to SmartSuite, its full-fledged competitor to Microsoft Office, averaged $136.44 in April vs. $217.72 for the Office upgrade, according to numbers compiled by PC Data, Reston, Va.

Redmond, Wash.-based Microsoft, meanwhile, has resisted going after Lotus with a componentized version of Office or battling it based on price.

"Price is not as important as meeting customers' needs," said Matthew Price, group product manager for Microsoft Office. "What is important is training and writing to a help desk. Can you build custom solutions? Is it connected to the Web?"

Price said that if there is enough interest in a componentized version of Office, Microsoft will deliver it. He said there currently is not that interest from corporate customers.

"Customers are not concerned about the language used for creating Office," Price said. "They don't care whether it's C++ or Visual Basic. They are looking for applications that fit their business needs."

In addition, IBM, Armonk, N.Y., plans to go head-to-head in Microsoft's own camp with NT-based products and bundles to compete with BackOffice.

"At the high end, we do not plan to bundle anything," said Jocelyn Attal, IBM vice president of NT marketing. "At the low end, we will be adding a lot of consistency in our products to make them more attractive."

IBM will be relying on MQSeries, its Commerce Server and DB2, all of which have been BackOffice-certified by Microsoft in the past several weeks.

"We will be ready soon with an NT offering that will be competitive to BackOffice," said Attal. "But our products will do more because they are cross-platform. They will run on NT, AIX, OS/400, OS/2, OS/390, Solaris and HP-UX. We will offer DCOM and ActiveX and DSOM and Pure Java on every product we propose."

IBM will begin its attack next quarter with a consistent marketing program and 100 percent fulfillment by resellers, Attal said.

Source: Computer Reseller News