Google on Tuesday agreed an alliance with Sun Microsystems that could heighten the competitive challenge it poses to Microsoft in the desktop software business.

The prospect of one of Microsoft's oldest rivals linking with its newest adversary sent a ripple of expectation through Silicon Valley. Some speculated that the two companies may attack one of Microsoft's core businesses, its Office suite of PC applications.

However, while the new allies hinted that Google may in future help to promote open source software that rivals Office, the two did not lay out any firm commitments. Shares in Sun Micro, which had risen in anticipation of Tuesday's announcement, closed fractionally up at $4.20.

Nevertheless, the sight of Sun and Google pledging co-operation brings a new edge to a long-running battle over the type of software platform that best suits computer users in the internet age. Sun has long championed Java, an open programming tool that runs on any operating system, as an alternative to Microsoft's Windows. In an admission of its failure to weaken Microsoft's grip on the desktop PC, Sun last year announced a partnership with its nemesis intended to bridge some of their differences.

Scott McNealy, Sun's chief executive officer, on Tuesday pointed to the Google alliance as a new front in the battle over software architecture. “It's back to the future: the network is the computer,” he said, echoing the rallying cry that has long underpinned the Java movement.

Eric Schmidt, Google's CEO, said he supported the vision of open computing platforms on which Sun's vision had been developed. A former chief technology officer of Sun, Mr Schmidt had been responsible for promoting Java. In the first product of their co-operation, the companies said that consumers who download Java software to their PCs, or who update the software they already use, will also automatically receive Google's Toolbar, unless they opt out. The Toolbar appears as a separate element in their browsers and takes searchers straight to the Google search engine. The bundling agreement would bring the Google software to millions more computer users, said Mr Schmidt.

Mr McNealy refused to respond to questions about other directions in which the alliance would develop but did nothing to dampen suggestions that it could extend into a broader partnership that could push into Microsoft's core markets. Referring to questions about possible new ventures as “all legitimate speculation”, he said: “We expect more.”

In particular, the two sides hinted that they were looking into ways of distributing a version of the OpenOffice software that can be used as an alternative to Microsoft's Office a product that last year accounted for 29 per cent of Microsoft's revenues and 41 per cent of its operating income.

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