Window Of The Future, WSJ>
September 20, 1999
Window in the Future
Bob Muglia is the man in charge of preparing Microsoft for
the wireless battles
By DAVID BANK
As senior vice president of Microsoft Corp.'s business-productivity group,
Bob Muglia talks a lot about using wireless devices and smart software to
provide "solutions" for on-the-go professionals.
But as a busy professional himself, he also has lots of experience with the
problems.
Recently, a minor emergency kept Mr. Muglia stuck in downtown Seattle
just when he needed to see an e-mail message to prepare for an important
business call. He searched a dozen pay phones before finding a data port
where he could plug in his palm-size computer. He wrangled with the
dialing procedures, connected, then downloaded hundreds of messages
from his office e-mail system just to get the one he wanted into his
hand-held device. Finally, he was ready for his call.
"The fact that I have to synchronize at 56k [kilobits
per second] is a terrible thing," says Mr. Muglia. "It
would be much better to have a wireless
connection to keep me synched all the time."
Mr. Muglia is in charge of easing such frustrations
for his fellow "knowledge workers" -- the analysts,
traders, administrators, sales representatives and
others who make up the bulk of the
information-economy work force. Along the way,
he should help Microsoft gain ground in a market
where it has long trailed badly.
Digital "personal companions" based on Microsoft's Windows CE
operating system had only 14% of the market last year, compared with
73% for devices from 3Com Corp.'s Palm Computing division, according
to International Data Corp., a Framingham, Mass., market-research firm.
This year, IDC predicts, Microsoft will fall even further behind, with less
than 13% to Palm's 80%.
In the nascent market for operating systems for a new breed of "smart"
cellular phones that integrate data capabilities, IDC expects Microsoft to
continue trailing both Palm and the Symbian consortium, backed by
Motorola Inc., Nokia Corp., Telefon AB L.M. Ericsson and other major
cellular-equipment manufacturers.
Demand for Access
But Mr. Muglia hopes to solve Microsoft's problems by solving his own.
He says knowledge workers want access to the same e-mail and calendar
systems they use at work through easier, faster, wireless connections.
Though Microsoft has promised such features, few are available yet. But
the company is betting that as increased wireless bandwidth and
microprocessor speeds become available, and the market for wireless data
devices takes off, the Windows CE products will become all the more
attractive.
"If things don't change, we don't win," says Jonathan Roberts, marketing
chief for Microsoft's wireless efforts. "It's very difficult to displace a market
leader if you don't change the rules. The only way to win is to bet on
shifts."
For their part, executives at Palm Computing expect Microsoft's efforts to
intensify, but they say they are ready for the onslaught. "They're a great
motivator," says Mark Bercow, Palm's vice president of strategic alliances
and platform development. "They argue that the way to take leadership is
to change the rules. Well, we're going to change our own rules."
Mr. Muglia, 39 years old, came to have responsibility for Microsoft's
wireless strategy almost by accident. The 11-year Microsoft veteran was a
driving force behind the March reorganization that aligned Microsoft along
customer, rather than technology, lines. As head of the
business-productivity group targeted at knowledge workers, Mr. Muglia
was given responsibility for Office, Microsoft's best-selling suite of desktop
applications, and Exchange, the e-mail and collaboration software that is in
head-to-head competition with the Notes software from International
Business Machines Corp.'s Lotus Development unit. The two software
systems have become increasingly integrated, with Office becoming a
universal "front end" for users, and Exchange handling much of the "back
end" processing.
The group didn't originally include Windows CE, an operating system
Microsoft is pushing for use in television set-top boxes, hand-held devices
(in Microsoft parlance, mini-laptops with mini-keyboards) and palm-size
devices (those that use a stylus for input). Microsoft executives at first
thought it made more sense to house Windows CE in the same group
developing new versions of Windows 98, Microsoft's operating system for
consumer PCs. "From a technology perspective, the link between
Exchange and Windows CE is basically zero," Mr. Muglia says.
But Mr. Muglia argued that from Microsoft's new customer point of view,
users of Exchange and users of palm-size PCs are one and the same. "It's a
potential base of customers who likely have a desire to get at their data,"
he says. "We figured out that the breakthrough applications were going to
come from these mobile scenarios."
Two-Part Strategy
Thus, Microsoft has a two-part strategy to leapfrog ahead of Palm. First, it
hopes to take advantage of increasing microprocessor speeds and
decreasing electric power consumption to offer more devices with fuller
features -- more memory, plus better screen displays, sound and color.
For example, some Windows CE devices can play digital music
downloaded from the Internet and display color photographs transferred
from PCs. That gives Microsoft's devices more bulk and less battery life
than Palm's.
"Today that's a bit of a disadvantage," Mr. Muglia says. "But it's on the
right side of the curve in terms of Moore's Law," the precept that, for the
same price, microprocessor power doubles approximately every 18
months.
Similarly, most early "smart" phones will include only a microbrowser to
retrieve data from the Web or corporate intranets. But Microsoft is betting
that as bandwidth increases and screens improve, users will want
full-featured e-mail and calendar features.
"The more you do sophisticated solutions, the greater our advantage is,"
Mr. Roberts says.
Second, Microsoft intends to exploit the success of Exchange and its other
back-end server software systems to help boost the sales of Windows CE
devices. For such users, "synchronization" with a back-end server such as
Exchange -- eliminating the need, say, to delete an old e-mail from both the
hand-held device and the PC back at the office -- will become a key
feature, Mr. Muglia says.
To back up its strategy, Microsoft has done a variety of deals to link
Exchange with wireless devices. Last year, it formed Wireless Knowledge,
a joint venture with Qualcomm Inc., which is expected to launch its
service for telecommunications carriers next year. In May, Microsoft
acquired Sendit AB, a maker of software that sends data to cell phones
based on Europe's wireless standard, global system for mobile
communications, or GSM. Microsoft also has an alliance with British
Telecommunications PLC to develop wireless data services abroad.
"Microsoft with Windows CE is very willing to invest, and they have the
profit stream to support it," says Michael Kwatinetz, an analyst with Credit
Suisse First Boston in New York. "The question is whether 3Com will be
able to make the same kind of investments in Palm."
Palm's Mr. Bercow says Palm is responding aggressively to every
challenge. He says Palm's fast, compact applications give it an advantage
over Microsoft's slower, bulkier software, even if Palm does not yet offer
features such as color screens and audio. "It's not about being able to do
e-mail, listen to MP3 audio and play multi-user games all at the same time
while riding in a taxicab in New York City," he says.
Instead, he says, the battle will be won by the company that best addresses
specific challenges, such as inventory management, sales-force automation
and expense reporting. Palm has announced a slew of partnerships with
companies creating such systems on its platform. "These are solutions that
have been created by vendors who are managing the corporate data," he
says.
And while the first generations of the company's devices were designed to
synchronize with desktop computers, not back-end servers, Mr. Bercow
says the company's alliances with companies that manage back-end data,
such as SAP AG, Oracle Corp. and IBM, give it the ability to deliver
corporate data, including that stored on Exchange servers from Microsoft.
The company's new Palm VII device, which includes a wireless connection
to the Palm.net network, doesn't yet deliver e-mail from corporate
systems. But, says Mr. Bercow: "I acknowledge that's an issue, and we're
addressing it."
Mr. Muglia also concedes that Microsoft must play catch-up to Palm. "In
every way, they are ahead of us," he says.
But, he adds, Microsoft will eventually triumph because of its ability to
increasingly link its software for mobile devices with its systems for
desktop computers and back-end servers.
"The underlying theme is one of integration," he says. "But while technical
integration is valuable, customer integration is more valuable. There's an
overall integration that's necessary between the device and the person."
-- Mr. Bank is a staff reporter in The Wall Street Journal's San
Francisco bureau. |
