Article

Microsoft: Covering their bets with .NET

Jason Bloomberg


Market Analysis
Microsoft: Covering their bets with .NET

ZapThink LLC, special to SearchWebServices
by Jason Bloomberg

Nothing polarizes an Internet technology discussion than the mention of Microsoft. In one corner you have Microsoft and its supporters, steadfastly sticking to the belief that Microsoft is a powerful, but fundamentally honest competitor who continually drives innovation to meet customer needs. In the other corner are the Microsoft-haters, who clamor about how Microsoft is an evil monopoly hell-bent on taking over the Internet, and eventually the world. Microsoft's development of its new .Net Web services platform has only added fuel to the fire. Customer-focused innovation? Or arrogant, irrational hubris?

The answer is not nearly that simple.

Microsoft's .Net framework is their Web Services-based model for how computing will be done in the future. Microsoft understands that the role of the PC is becoming less and less important as Internet bandwidth increases, and as people access the Internet in many different ways. As a result, they have spent close to two years working on their Web services model for their software.

Microsoft understands that for Web Services to gain widespread acceptance, however, they must be vendor neutral. If Microsoft's Web services only talk to other Microsoft Web services, then Microsoft will not be able to maintain their market dominance as they expand into this new area. As a result, Microsoft has been working with its competition in various standards bodies, and has submitted the nuts and bolts of .NET to ECMA, one of the major international standards organizations.

Depending on which side of the polarized debate you fall on, this might be a case of a "kindler, gentler" Microsoft finally willing to play ball in the open standards arena, or maybe it's nothing more than a bald-faced propaganda play. In reality, Microsoft's strategy is more subtle than either of these two extremes.

Let's break down possible outcomes to Microsoft's open standards efforts, and see how their strategy plays out.

First of all, the more widely accepted .Net becomes, the more .NET servers and tools Microsoft will sell, because, after all, they are the authority on .Net. Making .NET an open standard can only move more software.

Second, even though some of the core .Net technologies will be open standards, Microsoft still retains the rights to key patents, including their file transfer protocol, login procedures, and other key technologies. Companies are free to build their own .NET implementations, but need one of Microsoft's patents? Hand over the bucks.

Third, Microsoft will be making some of their source code available for value-added software that runs on top of .NET. Companies can use and modify Microsoft's source code under their own "shared source" license. If a company wants to commercialize the code, however, they must pay a licensing fee to Microsoft. Cha-ching!

Fourth, Microsoft makes no bones about how they will innovate an open standard beyond the scope of the standard. They did it with HTML, and they did it with XML. What's to stop them from doing it with .NET? If upcoming .Net software doesn't quite support the official .Net protocol, then companies will have to license the additions from Microsoft.

Microsoft is also using the open standards process to court developers. Ximian, a local Boston software company, is building a .NET implementation that will run on Linux. Microsoft fully supports this effort; after all, the more people who use .NET on Linux, the fewer will be using Java. In fact, Microsoft has a program called "JUMP to .NET," which explicitly recruits Java developers to the .NET platform.

What Microsoft is doing here is playing two of its adversaries against each other. On the one side is the open source/Linux camp, and on the other is the Sun/Java camp. These two camps are somewhat estranged, because Sun changed its mind about submitting Java to ECMA as an open standard. Microsoft is courting members of both camps with its .NET strategy.

Microsoft is the first to admit that .Net is not a platform-independent strategy. When asked about this, Bill Gates said, "No. .NET is a Microsoft platform. Just like the Windows platform. Windows was built on standards...but it was a Microsoft platform too. .NET is a Microsoft platform. ...The tools that we create, the user interface, the office productivity apps -- those will be built around .NET. That's a capitalistic act, OK?" (Bill Gates Unplugged, Redherring.com, Sept. 2000).

A Federal appeals court has ruled that Microsoft has behaved in an illegal, monopolistic manner. However, the court has yet to determine the remedy. It could be anything from breaking up the company to a slap on the hand. What Microsoft is doing with .NET is covering its bets: even if Microsoft will no longer be able to conduct its monopolistic practices, it will still have multiple revenue streams from .NET. So Microsoft is not being altruistic, but it's not being irrational, either. The fact of the matter is, Microsoft continues to be an extraordinarily shrewd competitor.


Copyright 2002 ZapThink LLC provides quality, high-value, focused research, analysis, and insight on emerging technologies that will have a high impact on the way business will be run in the future. To register for a free email subscription to ZapFlash, click here.

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