November 9, 1999 11:05 AM PST

Sun shelled out $73.5 million for Star Division

The acquisition of office productivity software maker Star Division cost Sun Microsystems $73.5 million, the company disclosed in a filing today.

The August acquisition gave Sun Microsystems not only a direct competitor to Microsoft Office that Sun will give away for minimal cost but also a way for Sun to try to undermine Microsoft's virtual lock on desktop applications. That lock--which a federal judge described last week as one of the methods Microsoft uses to keep its monopoly intact--occurs because Microsoft Office and Microsoft Windows reinforce each other's popularity.

Sun's long-term strategy with Star Office, the product acquired from Star Division, is to offer it as software that resides on a server computer. Clients--Windows PCs and a number of other types of computers--could then tap into the word processor, spreadsheet, and other software components via the Internet.

Sun will call the new product StarPortal. Sun expects a test version of StarPortal to arrive by the end of 1999 and the final version in spring of 2000.

Microsoft has its own plans for making Office available via the Internet.

The ordinary non-portal version of Star Office is available from Sun as a free 65MB download. To get the software on a CD along with a manual, the price is $39.95.

Sun paid $59.5 million for Star Division and $14 million for a related company, Star Company, Sun said in a Securities and Exchange Commission filing today.


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