June 22, 2000 3:30 PM PDT

Microsoft reveals plans for Web-based software services

REDMOND, Wash.--Microsoft today unveiled its long-awaited vision for the future of computing and a new strategy for enabling its Windows software for the Web.

Microsoft executives at company headquarters here today announced a new business strategy--called Microsoft.Net--aimed at making Microsoft's existing software available over the Web to traditional PCs and to new, increasingly popular devices such as cell phones and personal digital assistants.

The company also will attempt to entice software developers and partners to Microsoft.Net by creating tools for making other Internet-based services. Such services could be customized for individual or corporate use.

Microsoft chairman Bill Gates today said the goal of the plan is to connect every computing device, from desktop PCs to cell phones, and tie them to the Internet. In that scenario, all data will be synchronized, allowing consumers and workers to access the Internet, email, calendars and important files, regardless of what device they're using. The plan is to offer software over the Web as a service.

The Internet's influence has been spectacular to date, but the pace of innovation will accelerate during the next five years, Gates said.

"Our goal is to move beyond today's world of standalone Web sites to an Internet of interchangeable components where devices and services can be assembled into cohesive, user-driven experiences," he said.

The announcement marks a turning point for the company, according to analysts and competitors. Microsoft realizes that the products that have made it successful are also mired in the computing world of the past: fat client systems and Windows NT-based corporate servers.

"In many respects for Microsoft, this represents a profound shift," said Steve Mills, general manager of IBM's software division. "They realize that they have to live in an open world, and their ability to service large customers hinges on their ability to work in this world. The purely Windows-centric model that they were driving on the desktop with NT servers is something they need to shift away from to a more server-centric, Internet-based approach."

The Microsoft.Net strategy, previously called Next Generation Windows Services, will also revolutionize how people interact with their computing devices, Gates said. In the future, Microsoft will build handwriting and speech recognition into its software, allowing people to write notes or talk to computing devices, Gates said.

Gates did not announce availability or pricing for the new services, except to say that Microsoft is at least two years away from delivering on its vision of Microsoft.Net.

Microsoft chief executive Steve Ballmer also stressed that the new Web focus would not draw attention away from Microsoft's core products for PCs.

"Windows isn't going away, but to take advantage of this future trend in technology, we need this new .Net platform," Ballmer said. "We'll sell copies of Microsoft office for many years...This is not a quick transtion."

Gates also unveiled new technology, called "Universal Canvas," which will allow people to browse the Net, send email, and use desktop applications, such as word processing software, through a single window. As part of the strategy, the company announced plans for new versions of its software, including the Windows operating system and Microsoft Office.

"We have the opportunity to take the vision of a digital world and apply the magic of software to make this a reality," Gates said. "It's not quite like the past where there was one single device. There will be many different devices. We're talking about a new horizon that will take what the Internet is today and make that seem like it's quite limited compared to what's possible."

The new initiative is part of the software giant's goal of keeping Windows the dominant operating system, even as computing begins to move from desktop PCs toward Internet-enabled wireless devices, such as cell phones and handheld computers.

The company faces new challenges from Web-based devices, alternative operating systems such as Linux, and alternative programming models using the Java language.

Microsoft is not alone in the strategy for new Internet-based software. For years, Sun Microsystems and Oracle, fierce Microsoft rivals, have advocated this computing model, where devices have limited computing power and servers on the back end store and deliver the software. Today, standalone PCs contain most data and applications.

Microsoft announced numerous products today. Windows.Net 1.0, the next generation of Windows, will ship in 2001. The new version of Windows will continue to support older versions of the operating system.

The company also announced MSN.Net, which will combine the Microsoft Network consumer-oriented Web portal with new Web services, allowing people to access the content and software services they need. In addition, a set of subscription-based .Net services will give consumers Internet-based software, such as games, entertainment and education.

Microsoft in 2002 will ship a new version of Office, called Office.Net, which will feature a "natural user interface," such as handwriting and speech recognition. The company in 2002 also will ship a new version of Visual Studio software-development tools that will center around XML (Extensible Markup Language), a Web standard for exchanging data.

The company is working on bCentral for .Net as well, a Web portal that will allow small businesses to rent software, such as email, calendaring and a Web folder for storing files online.

The strategy includes Microsoft's Web-development software, called Windows DNA, which includes the SQL Server database and new software tools to help developers build Web-based software.

When asked how Microsoft's new strategy would be affected if the company was broken up, Ballmer said it was too soon to speculate. The antitrust case is currently on appeal.

"We're producing on this plan as we were last week...six months ago, and the year before. It's premature to speculate," Ballmer said.

In a related announcement, Microsoft and Loudcloud, the start-up headed by former Netscape Communications executive Marc Andreessen, said they have formed an alliance to use Microsoft software and services to deliver Loudcloud's hosted services offering.

 

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