May 22, 2003 9:12 AM PDT
Microsoft plans Jupiter landing
Microsoft will rely on its time-tested bundling strategy, key to its successful capture of the desktop market, to help jump-start its server software business.
The first phase of a new server software bundle code-named Jupiter will enter customer testing before the end of June, according to company representatives. Eventually the bundle, which includes some of the company's server products for building custom business applications, will be the cornerstone to Microsoft's ambitious plans to increase its share of the fast-growing market for integration software.
Microsoft's strategy binds together at least three of its server applications into a single bundle. Jupiter includes BizTalk Server integration software; Content Management Server, for storing and presenting business documents; and Commerce Server, for building e-commerce Web sites.
A company could, for example, use Jupiter software to automate an insurance claim-handling process that culls data from multiple back-end systems and routes documents to several people for approval.
Jupiter will be a critical weapon in Microsoft's ongoing efforts, along with its .Net Web services software, to break into the market for large-scale business systems, which is largely dominated by rivals selling Java-based products, analysts said. Web services are standards and programming methods that allow software applications to exchange data more easily.
In the process, Microsoft hopes to establish--after three years of trying--that Web services software is tough enough to handle large-scale computing tasks.
"Microsoft is counting on Web services projects to drive sales of its server products and development tools," said Rob Helm, director of research at Directions on Microsoft. "People won't do high-stakes Web services projects unless they can get the same level of security and reliability from Web services that they get from the application integration technologies they use already."
The software maker hopes to make its mark with a tightly integrated and attractively priced product set, said Dave Wascha, group product manager of e-business servers at Microsoft. The company also hopes the strategy plays into buyers' demands for software that is more reliable and easier to manage.
Microsoft's big advantages are having a consistent architecture, a consistent development model and software that comes out of the box, ready to go, said Ted Schadler, a Forrester Research analyst. "(Competitors from) the Java world have trouble with that."
Still, Microsoft is coming relatively late to the $1.5 billion market for integration software, which has become one of the software industry's most hotly contested arenas. A number of entrenched integration software companies are feeling increased competition from heavy-hitters such as IBM, Oracle and BEA systems.
Microsoft's Jupiter expedition
The software maker opens a new front
in its war with BEA, IBM and Oracle.
Schadler noted that Java-based middleware companies generally offer more sophisticated software that customers use to handle complex and demanding computing jobs. "But today, people are looking for technology that's good enough, and Microsoft is riding that wave," Schadler said. "It's a happy convergence for Microsoft."
Despite tight IT budgets, integration software is the fastest-growing segment in the middleware category, according to Gartner, in large part because sharing data between applications is a persistent headache for IT managers.
The majority of Microsoft's Web services software sales have revolved around its Visual Studio.Net development tool. Jupiter, in combination with Visual Studio.Net, could stimulate sales for its server software, since the bundle will help link .Net applications to existing business systems.
The first phase of the Jupiter strategy will introduce a revamped version of BizTalk software, which is used for transporting documents and data across company divisions or between business partners.
That overhaul of BizTalk, set for completion by the end of this year, will form the foundation of Microsoft's server application bundling strategy, according to Microsoft executives. Components incorporated in the forthcoming version of BizTalk, including workflow, administration and security, will also be built into Microsoft's Commerce Server and its Content Management Server to improve the ties among the three products, executives said. The full multi-application bundle will be available in the first half of next year.
The new version of BizTalk will introduce business process workflow software based on the Web Services Business Process Execution Language (WSBPEL) standard and incorporate Web services standards support for security. The revamped BizTalk will also sport a close coupling with Visual Studio.Net and the Office desktop applications, according to Microsoft.
Server bundling: Round 2
Jupiter won't mark the first time that Microsoft has attempted to sell server products as a suite. In the early 1990s, Microsoft created BackOffice, a bundle of the company's SQL Server database, Exchange messaging server, application management tools and other software. But critics of the bundle said the individual applications were never tightly integrated, and few companies wanted to buy all of the BackOffice applications. Microsoft eventually dropped the BackOffice bundle in 2001.
With Jupiter, Microsoft is trying bundling again, this time with a set of applications ripe for combination, said analysts. Companies often purchase separate products for integration, portals and transactions, but many business processes can be streamlined by drawing on all of these tools, said analysts.
Microsoft's integration push will come as integration software specialists--companies that only sell integration products--struggle to survive. One-time high-flier Vitria, for example, is under pressure to regain profitability. Its stock price has hung below $1 since last year. And Gartner found that Java middleware companies, which are relative newcomers to integration, took market share away from integration software specialists last year.
Despite a thinning of competitors, Microsoft has its work cut out for it. The company's bundling strategy, while specific to Windows, is hardly original. IBM, BEA, Oracle and other companies have already created "application platform suites." These Java server software bundles include a Java 2 Enterprise Edition (J2EE) application server, as well as corporate portal software and integration "brokers."
Microsoft's server software also lacks a long track record, particularly for the most demanding computing jobs, such as the running of complex financial systems or high-volume transaction Web sites. By contrast, Java middleware and specialized integration software from companies, such as WebMethods and Tibco, are designed to handle high-end integration projects on multiple operating systems.
An executive from one Microsoft competitor, WebMethods, asserts that Jupiter will have limited appeal to companies that have multiple operating systems and applications written with different programming models. As such, Jupiter will appeal primarily to small and medium-size business that have decided to be 100 percent Windows shops, said Scott Opitz, senior vice president of business development at WebMethods.
Microsoft also has to sort out thorny packaging issues. For example, Wascha said the company has not yet decided whether to sell a standalone version of BizTalk later this year that is independent of the Jupiter release. The company also has not yet decided whether to include its Host Integration Server, which pulls data from mainframe servers, in the Jupiter bundle.
Jupiter pricing, still to be determined, could be a quagmire for Microsoft as well, noted Ron Schmelzer, an analyst at market researcher ZapThink. Although it may be convenient to purchase a suite of server products, customers may balk at paying full price if they only use a subset of the features, he said. That was one drawback to Microsoft's earlier BackOffice efforts.
But even before Microsoft releases the full multi-application Jupiter bundle, analysts say that the forthcoming version of BizTalk will be mature enough to give established integration players a run for their money. The company can play off the growing maturity of its Windows Server 2003 operating system and SQL Server 2000 Enterprise Edition database, which greatly improve the reliability of Windows-anchored, industrial-strength applications, said analysts.
Playing to its strengths
One of Microsoft's biggest advantages over server software competitors is its dominance of the desktop software market, said analysts. The company is exploiting its desktop software stronghold to bolster its position in industrial-strength server software. For example, Microsoft's Visio diagramming tool will produce BPEL-compliant code from the design of a multistep business process, according to executives.
Jupiter will also include so-called business activity monitoring tools, which will let someone use an Excel spreadsheet to view the progress of an ongoing business process. For example, a call center manager could query the workflow engine to spot where incoming calls are experiencing long delays.
Jupiter server software will work closely with the InfoPath forms-building capability that Microsoft is building into Office 2003, said Wascha. InfoPath lets a person create a form, defined as an XML document. By tying the form with the XML-based workflow engine in Jupiter, the person could establish the approval steps of a simple purchase-order business process, Wascha explained.
The close coupling of Microsoft's desktop and server applications, combined with its traditional strengths in pricing and ease-of-use, give its renewed, albeit late, thrust into the server software market a distinctive look, according to analysts.
"Microsoft is taking its core strength, which is their dominance on the desktop, and they are leveraging it with their emerging strength in the server environment," Schmelzer said. "I can't imagine anybody else who could do this but Microsoft."