A company known by few outside the Linux community is planning to spin off a division that will try to take on Microsoft and Sun Microsystems.

Applix, which chiefly sells server software, is spinning off a division that makes productivity software that competes with Microsoft Office to form a company called VistaSource, according to Bernie Thompson, president of the new division. VistaSource's software, which runs on Linux and several other operating systems, is aimed squarely at Microsoft, the office software leader, and Sun Microsystems, which has its own office software for Linux and other operating systems. All three companies have the same goal: to win over application service providers (ASPs), companies that rent, rather than sell, software to customers. Although barely a blip on the radar now, the software rental model, proponents say, will become one of the dominant methods for small and medium-sized businesses to acquire software. And because no company has obtained a hammerlock on the business, it may just be possible for a start-up to establish a pioneering market share. Applix gave VistaSource a $6 million investment, but the subsidiary will seek its own venture funding and plans an initial public offering at the end of 2000 or in early 2001, Thompson said.