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Sun-Microsoft Deal Seen Benefiting Both

Sun Microsystems's sweeping agreement with Microsoft benefits both companies and their customers, but it remains to be seen whether Sun's decision to make nice with its longtime enemy will help reverse its financial troubles, analysts said Friday.

The $1.6 billion deal announced Friday settles Sun's antitrust and patent claims against its Redmond, Wash., rival. In addition, the two companies agreed to pay royalties for use of each other's technology, with Microsoft making an up-front payment of $350 million.

Sun is expected to make royalty payments to Microsoft when Sun incorporates Microsoft technology in its server computers.

From a technical standpoint, both companies promised that their products going forward would inter-operate at a level that will satisfy customers, who have had to struggle for years to establish communications between Sun servers running the Solaris operating system and desktops and servers running Microsoft Windows.

"Our customers will all be quite thankful that we got on with this as quickly as we possibly could," Steve Ballmer, chief executive of Microsoft, said during a joint news conference with Sun CEO Scott McNealy.

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