Microsoft Corp. and Sun Microsystems Inc. are sending waves of optimism through the smart card community after managing to find some common ground on thorny technical controversies.

The computer industry archrivals, promoters of competing smart card operating systems, have in recent days signed on to standardization initiatives of both Visa International and American Express Co.

The moves may help resolve some of the stalemates that have hindered the advanced card technologies, giving banks and others more confidence that any early investments they make will not be squandered.

Sun and Microsoft are among the first licensees of a standard American Express proposed for multiple-application smart cards. (See related article on page 16.)

The two technology leaders are also on a list of 30 licensees announced last week for the Visa Open Platform program. Visa characterized that number as a significant validation of its "globally interoperable" approach to multifunction cards, but the presence of Sun and Microsoft is a coup in itself.

They are almost always in different competitive camps and at philosophical loggerheads. Their parallel moves with American Express and Visa could foreshadow the kind of coalescence that industry observers have said is necessary to build momentum for smart cards, especially in the U.S. banking industry.

Also among the Open Platform licensees are vendors such as Hitachi Ltd. of Japan that have been working closely with MasterCard's Mondex program and its Multos operating system. Multos is viewed as the main alternative to the Sun and Microsoft smart card entries.

MasterCard International, its European affiliate Europay, and the Discover card organization all support the American Express smart card multiple application framework, and Visa "expressed its intent" to be a licensee, Amex said Monday.

Rumors have been flaring anew about a pending standardization or interoperability agreement among these rivals, and these formal announcements only thicken the plot.

Sun's Java Card standard, an offshoot of the company's Internet-friendly computer programming language, has been a major influence on the chip card market since 1996. Visa embraced Java for its Open Platform development and several pilots are under way or planned, including one by the U.S. General Services Administration with Citibank as card issuer.

In 1998 Microsoft introduced Smart Card for Windows, an extension of the Windows operating system that can boast of being accessible to even more programmers than the hundreds of thousands who have flocked to Java in recent years.

Officials in both technology companies' smart card departments issued statements of support for the Visa and Amex initiatives. They essentially reinforced the underlying missions: to provide a basic level of interoperability that serves to maximize the choices available to banks and others as they make technology decisions, and to protect the investments as new developments come down the pike.

Michael Dusche, Microsoft's director of smart card marketing, said the file structure that American Express offered to the travel and entertainment market, and which has now been widely endorsed, "is an outstanding example of what will strengthen the smart card industry."

The Open Platform Card Specification-which Visa has just released in version 2.0-"enables developers to quickly and easily create globally interoperable smart card systems," said Patrice Peyret, Sun Microsystems' director of consumer and embedded systems.

"Featuring platform independence and multi-application capabilities," he said, "the Java Card API (applications programming interface) allows developers to save time and money by allowing applications written for one smart card platform, enabled with Java technology, to run on any other such platform."

Mr. Dusche said Open Platform encourages "links between major manufacturers to create a more connected and stable environment for smart card customers. Such specifications can give customers the promise of compatibility, as licensees concentrate on providing the most innovative smart card solutions."

Visa International senior vice president Philip Yen said he cannot read into these actions that Microsoft and Sun are any closer to working in a friendly way with each other.

But they are showing "a willingness to work with Visa and others to give issuers a choice of technologies, to provide a bridge from one investment to another," Mr. Yen said in an interview.

Mr. Yen said that as major system vendors adhere to Open Platform, a bank would not have to fear being locked into any choice it might make. A mid-course strategic correction could become relatively easy and inexpensive.

"We have two major themes-market competition and choice for issuers," Mr. Yen said. Drawing on the familiar videocassette-recorder analogy, he added, "We don't want a situation where, if one side goes Beta and the other goes VHS, people have to buy two VCRs. We want the same VCR to be able to use both Beta and VHS."

Mr. Yen said Visa is intent on establishing standards without controlling the process itself, and in such a way that it promotes both banking industry efficiency and cross-industry cooperation to assemble multiple and profitable services on cards.

These principles are similar to those espoused by the Mondex-Multos backers. Governance of Multos has been handed to a consortium, Maosco Ltd., in which MasterCard and Mondex have only one vote. American Express and Discover are also in Maosco. Multos is designed to accommodate Java programs but is not itself based on that language.

American Express, similarly, has organized an Interoperability Consortium to assure system compatibility across all platforms including Multos, Java Card, and Windows. Sun coordinates a Java Card Forum.

Mr. Yen, who is based in San Francisco, emphasized that "American Express and Visa have very similar philosophies about being able to support and utilize multiple technologies."

He said the inclusiveness of Open Platform applies equally to Mondex and Multos and "we are committed to working with them." But he said he "could not comment" on whether the bank-controlled card groups are making any real progress together.

Mondex International officials in London have also declined to say anything, pointing out that general discussions with Visa have been taking place for some time without any need for public disclosure.

Three Maosco consortium members-Hitachi, the German smart card vendor Giesecke & Devrient, and Motorola Inc.-are also Open Platform licensees. Others on Visa's list work cooperatively with Mondex and American Express.

Besides Microsoft and Sun and the three that are also in Maosco, the Open Platform licensees are: 3-G International, Activcard, Bull, Cards Etc., Certicom, Dallas Semiconductor, DataCard, De La Rue Card Systems, Gemplus, IBM, Incad, Infineon Technologies, Japan Research Institute, N- Able Technologies, NEC, Oberthur Smart Cards, Orga, Racal Security and Payments, Schlumberger, Sermepa, Spyrus, STMicroelectronics, Toppan Printing, Toshiba, and Ubiq.

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