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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: axp who wrote (40239)	4/1/2000 2:54:00 PM
From: Thunder	Read Replies (1) \| Respond to of 74651

To All: 2000-04-01 Journal Business Reporter REDMOND -- Microsoft Corp.'s new corporate structure, announced Thursday, is just a refinement, not a full-blown reorganization, according to a company spokeswoman. With the ``refinement' costing $3.8 billion, however, something big is definitely afoot on the Redmond campus of the world's largest software maker. The movement of personnel and division titles includes more closely aligning Microsoft's former Windows and Developers divisions, along with creating a marketing unit and nine ``solution groups' that will identify what products to make and how to sell them. It's all part of a massive research and development effort that Microsoft has taken on in its year-old march toward reinventing itself as a customer-focused Internet service company. The initiative, known as ``Next Generation Windows Services,' or NGWS, is aimed at allowing businesses and consumers to access the Internet ``any time, any place, on any device,' said Chief Financial Officer John Connors. New initiative's aim Local industry observers say the goal of NGWS is to kill the proliferating Palm electronic organizer and its proprietary operating system by creating a universal Internet platform to end all platforms -- literally, as far as aspiring competitors go. ``If you think of the number of software engineers it will take to do this, this is not something that is going to happen by a dot-com or five guys in a garage,' Connors said at an investor conference held in Seattle March 22. ``This is going to take enormous investment, enormous clarity and enormous focus. ``This is the principle reason Bill Gates became our chief software architect, to lead this effort,' Connors said, ``because it will require thinking very broadly across our company, broadly across our industry.' Company personnel declined to discuss details of the new NGWS platform -- a $3.8 billion investment that Connors said Microsoft will formally announce in early May at its Forum 2000 conference. Connors, however, shed light on the plans during his March 22 talk when he said Microsoft wants to expand the number of Internet users by making it possible for all desktop and handheld devices to talk to each other with ease and simplicity. In doing that, the company hopes to greatly expand its share of revenues by getting out of software sales, per se, and moving into a software rental or subscription type model. The NGWS initiative is ``about software as a service rather than a boxed product,' said Jonathan Guerkink, an analyst with Seattle brokerage Ragen MacKenzie. ``Software is a service that provides applications for all these different devices. That gets at what (Microsoft is) driving toward.' For perhaps $5 a day, Guerkink speculated, Microsoft would use its news platform as a means to rent popular software. Connors indicated the company would also provide or serve as a pipeline to content services and entertainment. B2B is name of game The big target, however, is business-to-business services. ``Today, there are 50 million businesses that have fewer than 500 PCs but more than two,' Connors explained. ``Those companies spend on average per user about one-eighth what larger companies spend. When you move to a world where they can buy this software as a service, they will spend more. ``Today, they don't have (information technology) staff and they don't have the sophistication to invest' in large enterprise or resource management software systems, he said. ``In the future, they'll buy those as a service, and working with our partners, we want to be there.' Connors said it won't be easy, but it's a move that has to made. ``Our challenge is to build the platform so those devices can connect, so that people can build applications that can be published and subscribed on all different types of devices, and most importantly that the PC revolution continues and extends to non-PC devices,' Connors said. If Microsoft can pull it off, Guerkink gives Next Generation the thumbs up. ``If someone out there is hosting all this stuff and allowing you to just go out to the Internet and access it directly without having to worry about configuration,' Guerkink said, ``I have to think that pushes much broader adoption of computing applications.' Cydney Gillis can be reached at 425-453-4226 or cydney.gillis@eastsidejournal.com. eastsidejournal.com --------------------------------------------------------------------------------