From the WSJ:
Microsoft Elbows Into the Crowded
Business-to-Business Web Marketplace
By LEE GOMES and JEFF COLE
Staff Reporters of THE WALL STREET JOURNAL
The crowded business-to-business Internet marketplace has a brand-new
player: a software operation named Microsoft Corp.
With investors and Old Economy companies swooning at the profit
potential of business-to-business commerce via the Internet, Microsoft is
serving notice that it is not going to be left out of the picture. Microsoft
President Steve Ballmer announced that the Redmond, Wash., company
will be involved in a Web-based business-to-business exchange for the
aerospace industry, where companies such as Boeing Corp. would buy
parts.
Until now, Microsoft had scarcely been heard
from in the arena. But Mr. Ballmer promised
more such announcements by his company.
And Microsoft executives have begun aiming
their massive marketing guns at Oracle Corp.,
Redwood Shores, Calif., a longtime Microsoft
rival that is a business-to-business leader.
B2B, as the market segment is known, is one of the hottest in the
technology world, and Microsoft's emergence in the field shows how the
company is fully engaged in today's big battles even while trying to
conclude the government's antitrust case over a prior marketplace fight
involving Internet browsers and the Java programming language.
Indeed, some of the Microsoft executives who were point men in those
efforts, notably Charles Fitzgerald, a director of business development, are
coordinating the current business-to-business effort, especially on the
public-relations front. That is a crucial area, because business-to-business
is such a new area that many customers don't know what technology they
need for it, and will choose their partners based instead on often vague
marketplace perceptions.
"We are definitely going to be getting more aggressive about this," Mr.
Fitzgerald said of Microsoft's marketing effort.
A key difference between the Microsoft and Oracle approaches to the
new form of commerce, Mr. Fitzgerald said, is that Microsoft is not
insisting on getting a small percentage of every transaction its software
makes possible, which he said was Oracle's plan. Ray Lane, Oracle's
president, said his company will set up all kinds of exchanges, including
those in which it gets no transaction revenue.
Oracle's database software is widely regarded as the industry's best,
though Microsoft's version of the software -- which is used to file reams of
records and transactions -- has been making gains. The two companies are
long and bitter rivals: Mr. Fitzgerald, for example, portrayed Oracle's
products as too expensive and unwieldy for small companies. He also said
Boeing had been an Oracle customer, but joined the Microsoft camp
because the Seattle aerospace company had become disenchanted with
Oracle's approach.
Oracle's Mr. Lane replied that Microsoft's software is not reliable enough
for big companies, and said Microsoft must use its cash to get people to
try it.
Mr. Lane said his company had indeed lost Boeing as a
business-to-business customer, not because of dissatisfaction with Oracle
technology, but because Oracle's chairman, Larry Ellison, said in
December that Boeing would be using Oracle's products -- before Boeing
had actually decided to do so. "Since then, we haven't been able to get the
time of day from them," Mr. Lane said.
Boeing officials would not discuss details of their Oracle relationship.
Neil J. Herman, an analyst with Salomon Smith Barney, said that details
aside, both Microsoft and Oracle were fighting to assume the role of the
"trusted adviser" that traditional companies often turn to as they establish
themselves on the Internet.
Antitrust experts say Microsoft's interest in the business-to-business world
is likely to get the attention of federal regulators, who are expected to
watch whether Microsoft is unfairly trying to use its dominant position in
Windows software to enter a new market -- one of the core charges in the
current antitrust proceedings in Washington.
But no one is suggesting -- yet -- that Microsoft is doing that. And some
say the company's moves may actually be pro-competitive. "You want
Microsoft to be able to go into new markets as long as they don't
anticompetitively distort them," said Dana Hayter, a former Justice
Department attorney now in private practice at Fenwick & West in San
Francisco.
Write to Lee Gomes at lee.gomes@wsj.com and Jeff Cole |
