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If Microsoft Corp.'s Office suite were a standalone company, it would be the world's largest software applications business.

And Microsoft Office, with some $1.5 billion in sales and more than three-fourths of the booming suite category, could increase its domination with the arrival next year of an easy-to-use new operating system, Windows 95. But Lotus Development Corp. and Novell's WordPerfect, the principal suite rivals, are fighting back.

Suites have swept the market for two compelling reasons: Programs inside are intended to work together, an attractive feature to computer users needing to perform multiple tasks, and the bundle costs less than standalone products.

Microsoft intends to be first out with new versions of applications like its Word word processor and Excel spreadsheet soon after the planned first-half introduction of Windows 95, successor to the popular Windows 3.0/3.1 software.

The company then will drop those applications into a new version of Microsoft Office, which includes various business software programs in one box. "We will be the first office suite to ship [products based on] Windows 95 by a number of weeks or months," said Henry Vigil, director of applications marketing.

Microsoft will outgun its rivals in advertising, backing the new version-likely to be called Microsoft Office for Windows 95-with a broad campaign from Wieden & Kennedy, Portland, Ore., and Anderson & Lembke, San Francisco, that will include TV.

Lotus is testing TV spots for its Notes software; Charles Hamlin,VP-corporate marketing, said TV may be used for the company's all-in-one package, Lotus SmartSuite. Novell has no TV ad plans for its new suite, PerfectOffice, said Scott Nelson, suites product marketing director.

Hill, Holliday, Connors, Cosmopulos, Boston, is the agency for Lotus, while Dahlin Smith White, Salt Lake City, handles Novell's applications work.

Microsoft Office, introduced in 1988, last year became the industry's top-selling application. Sales in the past year nearly tripled.

Microsoft, however, won't have the year-plus lead with applica- tions for Windows 95 that it had early this decade with Windows 3.0 applications. Having been late to recognize a market shift from MS-DOS to Windows 3.0, rivals are preparing for Windows 95.

"We got a late start in the Windows (3.0) environment. We learned a hard lesson," said Novell's Mr. Nelson.

Novell, the leader in PC networking software, earlier this year bought WordPerfect Corp., which lost leadership in word processing to Microsoft after being late with its Windows product.

Novell at yearend is introducing an all-new suite, PerfectOffice, designed for Windows 3.1. Being last out with a product for the old Windows could be risky. On the positive side, most observers agree Windows 3.1 will be the top-selling operating system next year, buying time for Novell.

In suites, the real battle is for second place. Novell is trailing with PerfectOffice. "They're the third horse in a race that has already been around the track a few times, " said Robbie Bach, group product manager, Microsoft Office.

Mr. Nelson said Novell will succeed by building a better product that also allows customers to sample and buy complementary applications included on a CD-ROM.

PerfectOffice will be backed by print ads and direct mail. Mr. Nelson expects street prices for PerfectOffice to be slightly below Microsoft and Lotus. Novell's goal next year is to become No. 2.

At current No. 2 Lotus, Mr. Hamlin is focused on Microsoft.

"WordPerfect is entering a market where sales of the first and second players add up to 100% ...," he said. "God save WordPerfect from breaking into that."

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