Internet -- MCI will distribute Microsoft products: Internet Explorer, Internet Information Server, and Exchange Server. MCI will provide web-site hosting services in conjunction with these products.

On-line -- Initially, MCI will distribute a customized version of the Microsoft Network (MSN from MCI).

Networking -- In the Networking area, MCI will market Microsoft Exchange Server turn-key solutions for small business and satellite offices using distributed applications.

Other -- The two companies will develop and market solutions for vertical markets, focusing first on the education segment. Microsoft will market MCI products to its Windows users, including MCI Conferencing, ISDN, and various vertical market solutions. Microsoft will use MCI's telecommunications services to support its developer conferences and events.

Analysis

Partnering with MCI gives Microsoft a new distribution channel for the Microsoft Network, Internet Explorer, Internet Information Server and Exchange Server. It is also a fundamental part of Microsoft's goal to establish Windows NT and Windows 95 as THE leading platform for businesses who want to transact business, publish and exchange information via the Internet.

The growing ISDN market is a hotbed of partnerships between computer vendors and telecommunications companies. The MCI - Microsoft pact will open up new opportunities for MCI to market its ISDN telecommunications. Workgroup Strategic expects MCI's competitors, such as Sprint and AT & T, to react by exploring new partnerships to help them compete with the MCI/Microsoft alliance.