Sun Microsystems Inc. has agreed to acquire Integrity Arts Inc., a software company controlled by the smart card manufacturer Gemplus Group.

The deal, announced last week, would bring to Sun's JavaSoft division one of the companies that has been most active in developing programs for cards and other devices using the increasingly popular Java computing language.

Referring to projections that a 100 million-card market could grow to 3.5 billion within a few years, David Spenhoff, director of product marketing for JavaSoft, said, "We are at the early edge of a big explosion in this market."

"We are moving away from simple-function cards, which are little more than debit cards, to multifunction cards that will carry linked, branded affinity programs that you could take from merchant to merchant," Mr. Spenhoff said.

Using the first version of the Java Card API, or application programming interface, announced last year, Integrity Arts has written programs that can emulate a risk-management analysis for deposits and withdrawals.

Mr. Spenhoff said prototypes that use Sun's recently announced Java Card 2.0 would let stores in a mall issue cards that would track shopper-loyalty points and rewards transferable from one participating store to another.

Gemplus, the French company that makes more chip-embedded plastic cards than any other manufacturer, founded Integrity Arts in 1995. It was placed in San Mateo, Calif., to tap into Silicon Valley's well of software expertise.

Besides writing application software, the company develops tools for the "Java virtual machines" that must make maximum use of the available computing capacity on a microcomputer chip.

"We are talking about software products that card vendors would put inside to let the card do useful things," said Patrice Peyret, president and chief executive officer of Integrity Arts.

The 17-person, privately held company, like Gemplus an early supporter of Sun's Java strategy, has been trying to improve the programmability of a smart card by creating a kind of operating system that regulates other programs residing on it.

"Putting an interpretive structure within a card is like putting a ship in a bottle," said Mr. Peyret.

Alan Baratz, president of JavaSoft, said, "The Integrity Arts team represents a unique combination of skills and experience that will offer tremendous benefits to the smart card industry.

"Their combination of object-oriented programming skills, ability to build trusted systems and virtual machines, and knowledge of the smart card environment makes Integrity Arts an extremely strong contributor to the Java Card platform."

Officials at Gemplus said they decided to sell Integrity Arts-the price was not disclosed-because Sun, a leading technology supplier to the Internet and electronic commerce communities, can spearhead creation of a standard smart card operating environment.

"As the custodian of the Java Card platform, Sun is in the best position to achieve that (standardization) objective," said Marc Lassus, founder and chairman of Gemplus, based in Gemenos, France.

Java also plays into Sun's advocacy of network computing, in which programs and data reside on networked server computers and are delivered as needed to streamlined desktop systems and other client devices. Java programs are compatible across all operating systems; Sun's slogan is that they can be "written once to run anywhere."

Java software applications, often in the form of compact "applets," can be transported over networks. The services programmed into a smart card's integrated circuit, for example, can be changed or upgraded through a telephone connection.

Sun said companies representing more than 90% of worldwide smart card manufacturing capacity-including Gemplus, Bull, De La Rue, Giesecke & Devrient, and Schlumbeger-have licensed the Java Card API.

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