Microsoft Bows To The Internet

Microsoft Corp. is big but the Internet is bigger.

Faced with the rising appeal of the global public data network and erosion of its own influence in computers, Microsoft will revamp its online service and buy the rights to another company’s idea for exploiting the Internet.

In a remarkable capitulation announced Thursday, the world’s biggest personal computer software maker also disclosed plans to change its core operating system products to be more Internet-friendly.

Microsoft scheduled Thursday’s news briefing to discuss Internet strategy weeks ago. But, unlike the carefully designed rollout of Windows 95 this summer, key decisions about the Internet weren’t made until the last minute by Microsoft chairman Bill Gates and his aides.

Although it is far from certain whether Gates’ strategy can succeed, the prospect of Microsoft directing its might to the Internet helped deflate the high-flying stocks of several Internet companies - most notably Netscape Communications Corp., whose shares lost $28.75 each Thursday, closing at $132.50.

In a series of agreements, Microsoft said it would use Internet products developed in whole or in part by Sun Microsystems Inc., Oracle Corp., Spyglass Inc. and Computer Associates International Inc.

The company also licensed its Internet Explorer software to CompuServe Inc., a rival of Microsoft Network, its on-line service. The strategy is something of a turnaround for Microsoft, which usually tries to set software standards with its Windows operating systems and Word and Excel applications programs, rather than use a competitor’s.

The most important of Microsoft’s agreements could be with Sun Microsystems, under which Microsoft will use Sun’s Java Internet programming language in its browsing software. Browsers are used to navigate the World Wide Web, the part of the Internet made up of pictures, video and audio.

A Sun spokesman said the company’s programmers would work with Microsoft’s technicians to make Java compatible with Windows 95, Microsoft’s new operating system. Experts expect Java to be one of the main tools for building services on the Internet.

Because Java works on any kind of computer, it threatens the dominance of PC software that Microsoft achieved through Windows.

Microsoft will also change The Microsoft Network, an on-line service that became available in August and has signed up 500,000 customers, to be available on the Internet.

The company plans a new program to make Windows 95 work more directly with the Internet. It is to be available for free some time next year.