Microsoft’s operating system won the battle for the desktop. Now the software giant wants to remould the Internet to keep its dominant position. Jack Schofield reports Even if Microsoft’s Xbox games console flops, it should do at least one useful thing: it should stop people thinking of the company as merely a PC software firm. That is, of course, where the bulk of the Redmond-based giant’s money comes from. However, during the past five years Bill Gates’s programmers have been tackling a wider range of devices, from home games consoles such as the Xbox to server software for mainframe data centres. This is not just a matter of biffing Sony, Palm or IBM on the nose. Microsoft is betting its future on superseding Windows. So far, Microsoft has had limited success with its diversification programme. Its online service MSN, launched in 1995, has been trounced by America Online, which has about 30-million members. Its set-top box software, WebTV, has not taken off, and Ultimate TV is only just coming into use.
Microsoft’s commercial TV system which includes Microsoft’s TV server and TV advanced client software has also made a slow start, though Portugal Telecom’s TV Cabo cable network is using it for an inter-active service launched this week. Microsoft’s consumer electronics operating system, Windows CE, has struggled in the handheld computer market, and the Sega Dreamcast, which also used CE, failed in the games console market. However, sales of CE-based palmtop computers did start to take off last year when version 3 was launched under the PocketPC label. The iPaq PocketPC is now a hot item, and Compaq can’t make enough of them. This year Microsoft has also entered the cellphone market. At least four companies are developing cellphones based on a specialised version of the PocketPC-style software, including Sagem in France and Sendo in the United Kingdom. Still, consumer acceptance or rejection is many months away. In the business market Microsoft has promoted what its rivals would call network computers (NCs) running Windows from a centralised server instead of a local hard drive. This year it has also made a play for the mainframe data centre market with a high-priced version of Windows 2000 Advanced Server software.
Next year, with partners such as Compaq, it will target the portable wireless notebook market with the Tablet PC, which can be used without a keyboard. Soon you should be able to buy almost any kind of computing device running Microsoft software. And this is not just the culmination of the company’s “Windows everywhere” strategy from the early 1990s. It is the foundation for Microsoft’s move to the next level, with .NET. The fact is that whatever Microsoft does, not every device will run Windows. However, every device every games console, every cellphone, every computer could run Microsoft .NET software, and access a whole range of Web-based services.
Microsoft has already changed its “mission statement”, which is now “to empower people through great software any time, any place and on any device,” according to Gates, Microsoft’s co-founder, chairperson and chief software architect. Microsoft is by no means the only company developing software to meet the needs of a networked world. Rivals include America Online with things like AOL TV, IBM (WebSphere) and Sun (One). But these projects are “on nowhere near as grand a scale” as the one Microsoft is attempting, according to Chris Le Tocq. Until recently Le Tocq was Gartner Dataquest’s principal analyst, but this is such an important area that he has founded Guernsey Research to focus on Web-based services. He says: “Microsoft is rewriting the Internet as it wishes it had been written in the first place as a Microsoft platform.” In the computer industry a platform is what you need to build applications. In the early days the platform was the hardware and it was usually owned by IBM. You needed a specific type of computer to run particular applications, just like you need a specific type of console to run particular games. In the next stage the platform became the operating system, the core software that makes the hardware work. The operating system might be Unix or GNU/Linux, or Microsoft’s MS-DOS or Windows. The point was that as long as software ran on your chosen operating system, you were no longer locked into one hardware supplier. You could buy from IBM or Compaq or Dell or thousands of others. Today the operating system is still the key to the market. But in the future Microsoft, IBM and many other companies think the platform will be the Internet. And just as the operating system meant users did not have to care very much about hardware, the Internet platform could make the operating system “an under the covers choice,” says Scott Hebner, who markets IBM’s rival to .NET, WebSphere. But if it doesn’t matter what operating system you use, then you may as well use Linux because it’s free. Thus Microsoft stands to lose about $8-billion a year, which is roughly a third of its yearly revenue. This is why .NET is so important. Microsoft has seen lots of companies dominate a market and then fall into decline when the technology moved on. Thanks to the Web, computing is now moving on and Microsoft wants to be the first company to win two successive platform wars. Of course, this does not mean Microsoft is giving up on Windows. Gates never lets his troops forget that Windows has to deliver the best .NET experience. After all, Web services are making little, if any, money and Windows is paying the rent. But Microsoft is also refettling all its Windows products to make them part of the .NET eXPerience. Office XP, launched last month, continues the idea of selling software as a service and includes .NET’s “smart tags”. Windows XP, the new version of Windows 2000 due on October 25, has Passport built in: simply logging on to your PC will log you on to Microsoft. NET. Or, at least, as much of it as currently exists. But the main argument is about standards. The Internet is based on them; Microsoft isn’t. So why does the Internet need .NET? Microsoft’s response is that the whole .NET strategy is based on XML (eXtensible Markup Language), which the W3C (Time Berners-Lee’s World Wide Web Consortium) has annointed as the universal language for e-commerce. Microsoft and others have used XML to develop Soap (Simple Object Access Protocol), which was proposed as a standard jointly with IBM and then received the backing of Sun, among others. Microsoft, IBM and Ariba also started the development of UDDI (Universal Description, Discovery and Integration), which acts as a Yellow Pages for the Web services platform, enabling different websites to find one another and exchange information. All these are or look like becoming open standards and they seem to have more or less universal support, at least among the major players. As Ray Daniel, director of Hewlett-Packard’s E-Services Europe, puts it: “Everybody is talking the same language. They have to, otherwise it will never happen.”
Everyone at Microsoft also insists that the .NET platform is also open. For example, Jenny Duff, industry manager for Microsoft UK’s public sector business, says: “.NET will be completely standards compliant XM, Soap, UDDI and it will be the same standards as everybody else.” But while no supplier is beyond criticism, everyone seems to distrust Microsoft’s stand on standards. IBM’s Hebner says: “Even when they do implement [standards], they are doing it in the context of a Microsoft-proprietary platform” though that is also an accusation others level at IBM. Le Tocq argues that “while XML is an open platform, [things] you develop with it need not be, and Microsoft’s aren’t”. Indeed, he sees .NET as Microsoft doing what it has already done with Windows: “It has created a platform, created the tools and now it’s busy writing the applications that are going to use it.” The tools things such as Microsoft’s Visual Studio.net and C# language will enable millions of software developers to create .NET applications very easily. Developers will use .NET because it could provide a very large potential marketplace. Users will use .NET because it provides access to a large pool of applications, and they already have it in Windows XP and perhaps Office XP. “From Microsoft’s perspective, this is a tried and true business practice,” says Le Tocq. “And try as I might, it’s tough to see where the holes are.” If .NET is a platform for programming the Internet, then Hailstorm is an example of Microsoft’s .NET programming. It is not a single application but a set of services, based on Microsoft offerings such as the Passport authentication service and MSN Instant Messenger. At the launch on March 19 Gates said: “Hailstorm is not exclusvely tied to any particular operating system. We make it particularly easy to get at Hailstorm from Windows, but that can be done with any platform out there.”