MICROSOFT TAKES ON NETSCAPE : UPDATED EXPLORER DUE OUT TUESDAY.

Byline: Heather Green Bloomberg Business News

Microsoft on Tuesday will release a new version of its Internet browsing software, part of its strategy to trounce rival Netscape Communications.

The software is the third version of Microsoft's year-old Internet Explorer that lets computer users navigate the World Wide Web. It is the biggest upgrade and, more importantly, puts Microsoft's browser on par technically with Netscape's market-leading Navigator, analysts said.

``This is another impressive step along the way of becoming a bigger - perhaps soon the biggest - player in the market,'' said Ted Julian, an analyst at International Data Corp.

Internet Explorer has lagged Navigator, the first widely accepted commercial browsing software.

Netscape, in response, has sped up development and is rushing to release the third version of its browser in 20 months. Navigator 3.0 is due out during the next two weeks.

Netscape shares fell 2-5/8 to 44-5/8, while Microsoft's shares fell -3/4 to 124-1/2.

Both browsers now offer many of the same features, including three-dimensional graphics, audio and electronic mail. They also can read programs written in Sun Microsystems Inc.'s Java language and have so-called collaboration technology that lets people exchange, work on and discuss documents together.

Where they differ is in how easy many of these things are to use. Internet Explorer 3.0 has been redesigned and is easier to use than earlier versions. Its collaboration software, called NetMeeting, is more sophisticated and lets more than two people work together, while Navigator 3.0 is limited to two.