The Wall Street Journal Interactive Edition -- March 4, 1999
Tech Center
Microsoft to Bolster E-Commerce
Efforts With PeopleSoft Alliance
By DAVID BANK
Staff Reporter of THE WALL STREET JOURNAL
Microsoft Corp. is trying to bolster its e-commerce strategy with a
new initiative dubbed BizTalk after earlier e-commerce efforts
generated little biz action.
The software giant is putting forward its two top executives, Bill
Gates and Steve Ballmer, at an event Thursday in San Francisco,
an indication of the importance
Microsoft places on a market in which analysts say it has failed to
establish much momentum. As commercial activity increasingly
moves online, e-commerce software is becoming a crucial
software battleground.
The event also represents a coming-out party of sorts for Mr.
Ballmer, who since being promoted to president last year has
focused his attention on tying Microsoft's own e-commerce
and Web site activities more closely to its core software
business. Thursday's announcements are expected to include
plans to draw small businesses into Microsoft's own online
network and new software to help companies launch their own
Web sales sites.
Microsoft is expected to announce a partnership with PeopleSoft
Inc., a major provider of business-systems software. PeopleSoft,
based in Pleasanton, Calif., will announce plans to use Microsoft
technology in a combination of software and services called the
PeopleSoft Business Network, people familiar with the matter
said. PeopleSoft also agreed to adopt BizTalk, Microsoft's
initiative to make it easier for companies to integrate back-office
systems, such as inventory management, with their Web sites.
Microsoft is also expected to offer to host e-commerce sites for
small businesses under the rubric of Microsoft Network, the
company's online service, according to analysts and others familiar
with the company's plans. The small-business strategy is likely to
be based
in part on LinkExchange, a network of smaller Web sites the
company purchased in November. The company is also expected
to discuss plans to use technology to manage profiles of customers'
personal information obtained in last year's acquisition of Firefly
Network. The announcements will also include an alliance with
credit-card company Mastercard International, according to people
familiar with the matter.
Microsoft has long used a two-pronged strategy in the e-commerce
field. The company's own sites, including MSN Expedia for travel
services, MSN Carpoint for auto sales and MSN HomeAdvisor for
real-estate listings are becoming viable businesses on their own
and also have given Microsoft firsthand experience in the
requirements for e-commerce software. For example, Microsoft
offers the underlying technology used in Expedia to other travel
agencies, including American Express Co.
In addition, Microsoft's entry into a variety of new businesses
through its online services has spurred traditional businesses to
increase their spending on information technology, much of it from
Microsoft. As Microsoft executives see it, the company wins either
way.
"We have two ways of being successful, by being a small player in
a given industry and by driving people to our platform," said
Charles Stevens, vice president of Microsoft's Application
Developer Customer Unit and the architect of Thursday's
announcements, in an interview last year. "Scaring people is OK if
it gets them to invest."
The problem for Microsoft is that much of the new business
generated by the rush among companies to establish a Web
presence has been captured by Microsoft's competitors. The
company has launched major e-commerce initiatives several times
in the past two years only to see International Business Machines
Corp., Oracle Corp., Sun Microsystems Inc. and a host of smaller
players claim as customers many of the
merchants seeking to sell on the Web.
"They've scared the banks big time," said Karl Salnoske, general
manager of electronic commerce in IBM's software division. "We
win a lot of business from customers who are afraid to do business
with Microsoft in areas like e-commerce."
But the largest opportunities lie ahead. Many of the largest Web
sites, such as Amazon.com, still create their own software for
completing transactions, managing inventory and tracking users
because packaged products have so far lacked the features and
reliability they require.
"The most sophisticated applications are being built from scratch
and are often running on non-Microsoft platforms," Mr. Gates
wrote in an internal memo distributed last September. "We need to
have a great platform for building these applications, support for
scaling them to very large numbers of users, great tools to help,
and easy ways to
deploy and manage them. We are not delivering that today."
Microsoft's attempts to capture new business have also been
hampered by perceived deficiencies in its Windows NT operating
system, which is required to run Site Server Commerce Edition, its
electronic-commerce software. Many Web site operators prefer
variants of the Unix operating system, which are considered more
stable and able to
handle heavier loads.
Messrs. Gates and Ballmer are expected to announce an upgrade to
SiteServer that will work with the next edition of the operating
system, Windows 2000. But Windows 2000 is more than a year
behind schedule and won't be out until at the end of this year at the
earliest. After that, it is expected to be another six months before
the improved Site Server software is available.
"It is terribly important they get some attention," said Scott
Winkler, an analyst with Gartner Group in Stamford, Conn. "Right
now when people are talking about e-commerce, Microsoft isn't
the company that comes to mind. IBM, Sun and others are running
away from them. Our view is that they are behind technically."
IBM is preparing a new round of advertising building on their
effective "E-business" marketing campaign, while Sun has been
touting itself in television spots as "the dot in .com." Microsoft
executives themselves concede the company hasn't done a good job
packaging its e-commerce offerings into a coherent offering.
Microsoft executives declined to discuss their plans pending
Thursday's event. But analysts who have been briefed on the
announcements say Microsoft's problems in e-commerce have been
overstated and the company now has a plan to capture a new
generation of customers as more businesses move online.
"They're definitely not behind," said Stan Dolberg of Forrester
Research in Boston.
"Microsoft has a consistent game plan in every endeavor: build
products that will sell in volume. They tend to lead the market ever
so slightly. Microsoft is the master of doing 'good enough.' "
Microsoft already has many of the pieces it needs to establish a
dominant position in electronic commerce. Despite delays in the
release of the new version, many companies are standardizing on
Windows NT, which includes much of the underlying technology
needed to manage Web sites. Taken together, the company's Web
sites, including those grouped under the Microsoft Network brand
name, are second only to America Online Inc.'s in audience reach.
Microsoft's Internet Explorer Web browser passed Netscape
Communications Corp.'s Navigator in one recent survey of
customer usage, giving the
company another way to direct Web traffic. And the company's
support services for software developers who influence many
tehnology-purchasing decisions are among the most extensive in
the industry.
Analysts said Microsoft will try to exploit those advantages to
attract Web merchants who want a one-stop provider of
e-commerce services. With its new MSN Marketplace online mall,
similar to initiatives from Yahoo! Inc. and Lycos Inc., Microsoft
can even
offer to steer audience traffic from its own Web sites.
In return, Microsoft may be able to command recurring revenue in
the form of service fees or a cut of online transactions.
"It would be naive to think Microsoft will only offer the software
or the infrastructure without getting a cut of the transactions," said
one analyst who had been briefed by the company. "They want
recurring revenues from e-commerce, just like from Windows." |
