HEWLETT-PACKARD MAY be elbowing aside Digital Equipment Corp. to be Bill Gates' best networking buddy. At stake is the lead role in making Microsoft's Windows NT software the favorite for backoffice operations. In 1995, Digital CEO Robert Palmer got the inside track via a deal to install and service NT software for corporations. For DEC (and now for HP), the service deal allows entree for follow-on hardware sales. Up to $5 billion of DEC's yearly sales--one-third of revenue--is from Microsoft work.

HP announced on Mar. 19 a wide-ranging pact with Gates that some analysts say overshadows Microsoft's with Digital. As well as installing and servicing NT software, HP, for instance, will help Microsoft adapt HP's OpenView network management software to run with NT. To Mark Specker, a Soundview Financial analyst, Digital hurt itself with Microsoft by pushing its Alpha chip when customers preferred Intel-based machines for NT.

Although HP execs are crowing, Digital Veep Robert Bismuth says the Microsoft deal isn't as far-reaching as it seems. Digital, he says, will keep its lead because of the ''stellar job'' it does for Microsoft. At the HP news conference, Gates called the HP link ''a broader relationship'' than Microsoft has ever had before, but he deferred any comment on Digital.

By Paul Judge and Peter Burrows


Updated June 23, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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