By DAVID BANK / The Wall Street Journal

The invitation from the Roger Siboni, KPMG's vice-chairman, capped Netscape's success in a months-long effort to win a major contract to supply KPMG with Internet software.

Two months later, however, Microsoft Corp.'s chairman, Bill Gates - not Barksdale - stood with Siboni on the stage in Orlando, after Microsoft walked away with the KPMG Internet business and much more.

In those two months, Microsoft offered a blizzard of incentives so compelling that Siboni reversed his decision, rescinded his invitation to Barksdale and directed technicians to remove Netscape's software that was already being installed on KPMG computers.

"We saw a Microsoft organization that was relentless in terms of desire and drive," Siboni says. "We understand why Microsoft is what Microsoft is. They're smart. They're tough. They're relentless."

Microsoft's tactics for taking away one of Netscape's most important customers illustrate the company's ability to extend its reach and conquer new markets.

The Redmond, Wash. company had such deep pockets, and so many ways to tie a simple software sale to broader oppurtunities, that it can, in effect, pay customers like KPMG to use its products.

No one, including Barksdale at Netscape, is saying that Microsoft did anything wrong, unethical or illegal in relentlessly chasing the KPMG account. All that was broken, says a disappointed Barksdale, was an oral commitment.

"Roger told me I had the business, and that's all I needed," Barksdale says. "I never met a man who wouldn't keep his word if it didn't cost him any money. The trick is, who will keep their word when it will cost them some money? That seperates the guys I want to hang with from the rest of the pack."

Before losing KPMG's Internet business to Microsoft, Netscape had actually won it not once, but twice.

After evaluating both companies' products last fall, KPMG selected Netscape over Microsoft to create an "intranet", an Internet based internal network for KPMG's U.S. operations. The Netscape software was to be used to allow KPMG's 18,000 accountants and consultants to share documents, exchange electronic mail, connect with clients, automate businesses processes and even hold electronic "town-hall" meetings.

Netscape announced the deal on January 24. The news caught Microsoft off guard.

"That was not a good day for me," says Ian Rogoff, Microsoft's manager for large corporate accounts. "There were a ton of meetings at all levels. 'What did we do wrong? Why did KPMG select Netscape?'"

The questions came from Jeff Raikes, Rogoff's fiercely competitive boss and one of Gates' chief lieutenants. Microsoft sees Netscape's lead in the Internet-browser market as one of its most serious challenges. Easger to see if the Netscape deal could be broken, Raikes gathered intelligence from his sister, who happened to be a KPMG consultant. She suggested calling Siboni.

Siboni agreed to a breakfast at the Ritz-Carlton hotel in New York in February, which led to KPMG holding a competitive "bake-off" between the two companies' products.

KPMG's technical experts, who earlier selected Netscape, were suspicious and hostile about Microsoft. But Microsoft eventually won the KPMG business, in part by proposing to make KPMG not just Microsoft's customer, but its partner.

The company outlined plans for a joint KPMG-Microsoft effort to capitalize on the sales momentum of Microsoft's Windows NT operating system. Rogoff proposed a joint effort to serve corporate customers interested in electronic commerce and the automation of sales-force procedures, areas in which KPMG specializes.

In addition, Microsoft used its financial muscle to seal the deal, including spending millions of dallars to buy stake in a KPMG subsidiary and open KPMG centres around the U.S. to market management services to companies adopting Windows NT.