LOTUS Development is releasing an Internet-friendly version of its best-selling groupware program Notes. Release four of Lotus Notes, to be introduced next month, will include new development tools for the World-Wide Web - a Web browser, and web page authoring and server software. Lotus also cut the prices of new client software. Lotus's announcement comes in the wake of other companies revealing their own Internet strategies. Most prominent of these was Microsoft's announcement that it would licence Sun Microsystems' Java programming language for use in its operating systems. Analysts said Lotus's intentions demonstrate its determination to make a belated entry into the on-line market. 'The World-Wide Web could pose a threat to Lotus Notes,' said Douglas Ardinger, an Internet analyst at Dataquest. Analysts also say the Internet provides many of the same electronic messaging and networking functions offered by Notes. Lotus risks being left behind if it cannot make the leap from the corporate 'Intranet' to the Internet, analysts said. The message from Lotus officials was that Notes could handle the challenges posed by integrating with the unregulated Internet. 'Notes and the Internet complement each other,' said Alfred Tsoi, managing director of Lotus Development, Hong Kong. Lotus officials said that introducing Internet capabilities into Notes would not compromise its security and ease-of-handling features. Lotus also said it would cut the price of its run-time client version of Notes software by more than half. Notes Desktop would cost US$69, as against US$155 before. Meanwhile, Lotus's new Notes Mail client software will debut next month for about US$55. 'The hardware side price war has now moved over to the software side,' said Allan Tan, Dataquest analyst for professional services. 'The difference is that in hardware the product cost is fixed. In software, you can cover your research and development costs by dropping the price to almost free if you can get enough volume.' Analysts said Lotus was pursuing a strategy similar to that of Internet software maker NetScape, which is giving away its web browser software for free in order to attract software developers and users to buy its more expensive server software. Lotus raised the price of its Notes server software to US$495, from US$275. Analysts said the pricing signified Lotus's willingness to sacrifice profit margins for the sake of consolidating Notes' position as an industry standard. 'Software application developers want to be compliant with Notes just as they want to be compliant with Windows 95,' Mr Tan said. Dataquest statistics from 1994 showed that while Microsoft led Lotus by a wide margin in the Asian business software market, Lotus Notes was doing especially well in the English-speaking Asian countries including Singapore, Malaysia and India. Lotus is also girding its position as the worldwide leader in groupware software, which provides companies with private messaging and filesharing networks, as it prepares for the release of Microsoft Exchange. Exchange is a groupware program similar to Notes. Microsoft announced the product's release more than a year ago. 'Microsoft is famous for pre-announcing products,' Mr Ardinger said. 'I don't really know when it's coming out.' But Microsoft's recently-announced alliance with Sun could give it a competitive edge over Lotus in the transition to the business software market of the future. Industry-watchers predict that soon computer users will rent little bits of software via the Internet for one-time use only rather than buying huge software packages. Sun's Java is an easy-to-use object-oriented language which proponents say will be instrumental in creating these little software applets. Java also helps obliterate hardware distinctions and incompatibilities, say between a PC and a Mac.