It is proving a challenge for them.

What the federation approach does is provide the capability, through Passport, to make a single administration point for internal and external sites.

Microsoft would no longer have guaranteed placement on users' desktops. That would mean its ability to leverage the desktop in terms of selling other services would be severely reduced, or it would have to negotiate directly to get that leverage.

It makes storing objects locally or on the Web essentially follow the same process.

This is the last hurrah for the current architecture. The next version of Microsoft's consumer operating system, Windows 2000, will be based on [a Windows] NT kernel. The business user transition from Windows 95 to NT Workstation is gradually emerging.

I really think that AOL is going to have to be pushed real hard to sign on to this.

One of the things that users can expect is that there will be more and more integration between Microsoft's services.

For instance, on a small business computer from Hewlett-Packard, the word 'Microsoft' may never appear on the screen.

We're talking about something that's four-and-a-half years old. Although there are a lot of businesses that still have Office 97 running, getting free support so many years after, that's pressing your luck.