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Fast to Follow, Microsoft Embraces Internet Software Model

Posted on: Wednesday, 22 March 2006, 12:00 CST

By Steve Lohr

Microsoft faces a potent challenge as software is increasingly built and distributed as a service on the Internet.

The company Monday offered the most detailed glimpse to date of its strategic response: embrace the Internet software model, add its own offerings and link the new technology to the coming version of its Windows Vista operating system.

It is a familiar game plan for Microsoft. From the spreadsheet to the Web browser, the company has rarely been a pioneer, but it has been very successful as a fast-follower in new markets.

"This is classic Microsoft strategy, never a first mover but impressive once they get focused," said Ted Schadler, an analyst at Forrester Research.

In its appeal to developers and companies, Microsoft is touting its ability to provide Web technology that brings together server, desktop and Internet software seamlessly. Bill Gates, Microsoft's chairman, said, "We will definitely have a comprehensive model."

At a Web designers' conference in Las Vegas, Microsoft announced on Monday the release of its tool kit for a technology known as Ajax, which makes it possible for Internet-based software to mimic the appearance and responsiveness of desktop personal computer programs.

For the last two years, software developers and start-us have been using the freely available Ajax building blocks to build all kinds of programs quickly and inexpensively. Those programs range from sophisticated e-mail and collaboration systems that tie together Web services like www.housingmaps.com, which links Google's mapping software with property listings on Craigslist, the online bulletin board, to display houses and neighborhoods.

Microsoft has not yet profited from Internet services nearly as much as rivals like Google and Yahoo, which have strong businesses selling ads on their sites. Microsoft competes with them not only on its MSN Web site, but is also developing online software services, Windows Live and Office Live, which will sell ads.

In the competition for online advertising, Microsoft is betting that it can gain an edge by wooing developers with superior software tools. "Neither Google nor Yahoo has a developer framework," Gates said in an interview. But software rivals question whether Microsoft's traditional strategy will prevail as more software is delivered as a service over the Internet. In the past, Microsoft was typically the low-cost supplier, undercutting competitors on price and outselling them.

Yet the new Internet software is often distributed free or at very low cost. Conventional software is improved in cycles that stretch on for years, while Internet software can be continuously debugged and upgraded.

"This time, things are very different, and it won't be easy for Microsoft to compete as it has in the past," said Scott Dietzen, president and chief technology officer of Zimbra, a start-up using Ajax technology to make e-mail systems.

Source: International Herald Tribune

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