Michelle Arden was working in the engineering division of Sun Microsystems Computer Co. four years ago, pulling together joint development deals for the hardware manufacturer, when she saw the Internet boom on the horizon.

Ms. Arden, who has cruised the Internet since the early 1980s, said she was struck by the large number of Internet-related companies that had begun to spring up around Sun's Mountain View, Calif., headquarters.

So, when tapped to lead Sun's newly created Internet Commerce Group in April 1994, she knew what she was getting into.

As director of operations and business development for the group, Ms. Arden's task is to help Sun Microsystems leverage its workstation and networking technology for the burgeoning electronic commerce business.

Working closely with Sun's financial services team, she has her sights firmly fixed on banking industry opportunities.

Sun's powerful workstations and servers have made it a major presence on the wholesale and investment side of banking, and though the company has begun to penetrate the higher-profile retail side, Ms. Arden's unit is hardly a household name to bankers.

"They've been a niche player for a long time," said Mark Hardie, a consultant with Tower Group in Wellesley, Mass. Their Internet product "branches them out to retail, where they haven't been as strong before."

Ms. Arden and her counterparts are nonetheless optimistic about the company's future business with banks.

"Banks are moving surprisingly quickly into the electronic commerce world," she said. "Banks are concerned with consumers' passing them by."

The Internet Commerce group was born out of a series of meetings beginning in the summer of 1993. Led by Eric Schmidt, Sun's chief technology officer, the sessions were designed to generate ideas about where the networking business was headed and how Sun would approach it.

Although initial plans focused more on "a specialized hardware" and were "very flaky," Mr. Schmidt said, the rapid rise of Internet-based products like the Mosaic Web browser soon coaxed Sun down toward "a more network- central focus."

Ms. Arden and her engineering counterpart, Carolyn Turbyfill, helped hone Sun's networking technology into marketable offerings.

The Internet Commerce Group made its first big splash in May, unveiling a laundry list of products and services for Internet browsing, transacting, and security. These include a transaction system called SunScreen, a public key encryption mechanism dubbed Simple Key Management for Internet Protocol, or Skip, and a dynamic Web browser, HotJava.

Sun also markets Netscape Communications Corp.'s hot Navigator program, which allows companies to create home pages and buy and sell goods on the Internet.

Ms. Arden steered the marketing focus toward banks and other financial service companies, enlisting Union Bank of Switzerland as a reference site to encourage other banks to sign on, Mr. Schmidt said.

Fourteen companies, including at least five banks, are already testing the SunScreen product, according to Humphrey Polanen, the general manager of the Internet Commerce Group.

Although Ms. Arden noted that traders and investment houses tend to be more technologically sophisticated, commercial bankers are no longer content on the sidelines of the Internet boom.

Ms. Arden, a Harvard and University of California at Berkeley grad with an extensive background in network engineering, was using the Internet a dozen years ago, when she was employed as a workstation developer in a Dutch research lab and when personal computers were not a household appliance. She used the global utility to communicate via electronic mail with her friends in the United States.

Sun also has a long history with the Internet. The company was founded by researchers from Berkeley and Stanford University who were some of the early developers of the huge network. The company has also been steeped in the use of public and private networking.

Electronic mail is the most pervasive form of communication at Sun and has been, Ms. Arden said, since she began working there in 1985. For strategic purposes, the company made the Internet its communications medium, and Sun employees receive upward of 100 electronic mail messages a day, she said.

The company's employee benefits have been posted on-line for more than five years. Sun was also slightly ahead of the curve in launching its own site on the Web more than a year and a half ago.

Ms. Arden's first business card at Sun included her Internet address.

"Sun was, at that time, unusual," she said. "Use of the Internet has always been fundamental to its business model. What we've come to realize in the past few years is how far ahead of most of the industry we are."

But the industry is quickly catching up.

Though it may have staked an early claim on the Internet, Sun is still recognized by the banking industry solely as a maker of the workstation tools in trading and capital markets, said Mr. Hardie of Tower Group.

He said because of its historical emphasis on open computing and networking, Sun does not face as steep a "learning curve" on the Unix operating system as Microsoft Corp. or International Business Machines Corp. - two other major players in the electronic commerce market.

However, unlike those computing colossuses, Sun has "limited exposure to banks," he said.

Ms. Arden, too, has limited experience with the financial industry. But she does have experience helping Sun break new ground.

When she joined Sun a decade ago - fresh from work in a Unix development group at Berkeley, where she also obtained her master's degree - she began work as a member of the technology staff in corporate marketing. There she helped Sun enter the oil and imaging markets.

A year later, she was bumped up to a position as product manager handling Windows-based products, which were relatively uncommon on distributed systems in 1986. This was one of the first steps toward the distributed environment of today.

In her new position, Ms. Arden said she expects to blaze a new trail for Sun on the Internet by overcoming the most basic hurdles.

"I think there's a lot of fear - fear of the unknown as well as fear of potential illegitimate uses of the Internet," she said. "But they (banks) badly want to enter that world."

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