NEC and Microsoft announce Japanese tie-up

Microsoft and NEC have announced they will work together to develop and manage corporate computer systems in Japan.

The deal will unite Microsoft's software products with NEC's server hardware.

The companies will also co-develop a range of internet services for businesses.

Microsoft chairman Bill Gates told a news conference in Tokyo: "The demand for very reliable high-end servers is going to be a very expanding market."

He also praised NEC for taking a "very aggressive approach" to developing and marketing servers.

Microsoft already has similar agreements with two other Japanese electronics companies, Hitachi and Fujitsu.

NEC has a tie-up with US software company Oracle.

The agreement with Microsoft is part of NEC's strategy to build its server business, which holds more potential for growth than Japan's personal computer market.

NEC shares rallied on media reports of the alliance, rising 2.4% to close at 1,159 yen (or £6.59).

The tie-up was announced after stock markets closed in Tokyo.