Microsoft Corp. is putting the finishing touches on a strategy that attempts to undercut moves to displace personal computers in corporations with low-cost network computers.

The latest move is an agreement to use software from Citrix Systems Inc. that will let corporate users run Windows applications from a scaled-down computer terminal, instead of a traditional PC.

It follows the recent unveiling of specifications for NetPCs, a new form of computer whose innards are sealed off from users; and a Zero Administration for Windows initiative, which will make it easier for corporate information managers to remotely monitor the performance and update the abilities of such NetPCs.

With all its efforts to reduce the complexity and cost of managing and maintaining desktop computers, Microsoft has transformed the traditional PC into something closer to the network computer, or NC, model advocated by Oracle Corp.'s Larry Ellison and Sun Microsystems Inc.'s Scott McNealy than the decentralized Windows computing scheme the two set out to topple more than a year ago.

"Fundamentally, what they [Windows terminals and NCs] try to accomplish is very similar for the user," said Greg Blatnik, an analyst at Zona Research Inc. "In the dark they will be hard to tell apart."

The winnowing of the Windows operating system, or OS, marks a reversal of position by Microsoft Chief Executive Officer and Chairman Bill Gates, who once ridiculed the NC as a step back to the days of dumb terminals and mainframes, the computing era that preceded the PC revolution.

The Citrix deal, for instance, calls for Microsoft to integrate Citrix's technology into future versions of Windows NT, Microsoft's network OS. This will enable older and underpowered PCs to access and execute applications stored on a central server, like an NC does.

"The dumb terminal is now the Windows terminal," said Brian Murphy, an analyst with The Yankee Group, who added that Microsoft altered its position as it became apparent that the lower cost of ownership delivered by the NC and Java is intriguing to corporations.

"Microsoft rains on people's parade until the parade gets going. Then they want to be the drum major," he said.

In addition to extending the reach of Windows from full-blown multimedia PCs down to "Windows terminals," the move helps Microsoft answer critics' charges that Windows is too complex and too expensive for corporations to maintain.

Slimming down Windows could also deflate the momentum of the NC movement, an alternative to Windows-based computers that calls for businesses to deploy low-cost terminal devices connected to powerful servers and run applications written in the Java programming language from Sun.

"This is another entree on the Windows-everywhere menu," said James Greene, an analyst at Summit Strategies, a Boston-based research firm. "It's aimed a step below the PC and is targeted at businesses that would have gone to terminals or network computers."

Proponents of NCs and Java, however, argue that Microsoft's efforts to turn Windows NT into a multiuser OS is nothing more than a cheap imitation of the distributed computing capabilities of Java.

The main advantages of Java, said Steve Tirado, director of product marketing for the Java Systems group at Sun, is that it works independently of the operating environment or client hardware, and Java-based applications are executed on the client instead of the server.

Source: Inter@ctive Week