In an undertaking Microsoft likens to NASA's first lunar landing, the company next month will detail a "risky venture" to transform itself into a provider of software services delivered over the Internet.
The company will highlight a plan to further integrate its server software and development tools to create a platform that will let Microsoft applications be delivered as services over the Internet instead of in shrink-wrapped boxes. The company plans to forge ahead with this plan despite being in the glare of the US Department of Justice, which has concluded Microsoft's products are already too intertwined.
Critics are sceptical that the company can pull off what has been called its Next Generation Windows Services (NGWS) strategy, which Microsoft will formally launch and rename at an event on its Redmond (Seattle) campus scheduled for June 22.
The company is postponing the event because it felt the expected final ruling last week by the US District Court in Washington, DC on the antitrust case "would distract attention and focus from our [NGWS] event. . . ."
"Microsoft loves spinning grand schemes, and this is another grand scheme," says James Kobielus, an analyst with The Burton Group. "It will position everything it does now under this software-as-services banner."
In theory, companies would be able to integrate internal programs and data with services and information available on the Internet to create a rich interactive environment.
For example, a corporate accountant creating a forecast could automatically incorporate economic and country data provided by Web-based software services into internal programs and planning projections. E-commerce sites could benefit from reusable services, such as sales lead generators, for creating and customising their Web sites.
In this model, Microsoft says the lines between Web sites and applications will blur, because some sites will actually be providing programming logic that can be called over the Internet by other applications. The applications themselves will be built from standard components that can be stored and used anywhere on the Web.
Although Microsoft has been tight-lipped about NGWS, sources say the company won't introduce any new products - just modifications and enhancements to existing software that will be delivered in the next two to three years.
The glue for the entire initiative will be XML, and Microsoft will re-engineer its servers, development tools and software to drive XML into the core of all its products. XML is a set of tags that provide data about data so disparate programs can exchange information.
A key focus for XML will be the servers that make up Windows DNA 2000, a platform for building Web-based applications. The servers include Windows 2000, SQL Server 2000, Exchange 2000, BizTalk Server 2000 and Host Integration Server.
Microsoft also will build into Win 2000 a new file system for storing XML objects and XML schema. It will also create a new version of Component Object Model, its component architecture for accessing Windows services, and add new services for transactions, management and queuing. The new services let Win 2000 manage applications and services running at various points on the Internet.
Another key to NGWS will be Microsoft's Simple Object Access Protocol (SOAP), which was submitted by Microsoft to the Internet Engineering Task Force late last year. Microsoft hopes SOAP will become a standard way for programs to interact regardless of the platform they run on or the language they are written in.
Microsoft will also add enhancements to its Visual Basic and Visual Studio development tools. These tools will let users create building blocks and assemble them into services and applications that can run on the Internet, enterprise servers and PCs. Chairman and chief software architect Bill Gates said a common software architecture and single programming model will be the foundation of NGWS.
Microsoft is also expected to develop a set of Internet-based services similar to Passport, its online electronic wallet service. The new services include billing, identity, personalisation and storage.
"This is an initiative to create a high level of integration and is almost a complete reorganisation of the Microsoft architecture," says Rob Enderle, an analyst with Giga Information Group. "But I haven't seen anything new it has done that has gotten me excited."
Enderle and others are sceptical that Microsoft can succeed.
"Given the pressures of the next phase of the antitrust trial, this transformation will be hard to pull off. It's an odd initiative when the government is contemplating breaking [the company] up," he says.
Enderle gives Microsoft only a 20 per cent chance at success given the antitrust case. He also cites the absence of Jim Allchin, vice president of Microsoft's platform group, who helped spearhead NGWS but left last week on an extended leave that observers say will become permanent.
Also, Sun Microsystems, Oracle and Hewlett-Packard are already planning similar ventures that offer software as services available on the Internet.
"Microsoft has a lot of incentive to pull this off given what its competitors are doing to attack business-to-business commerce," says Mike Hagan, chief operating officer of VerticalNet, a Web site that links buyers and suppliers in 56 industries.
In January, Microsoft made a $US100 million investment in VerticalNet, its largest investment in a business-to-business dotcom to date. "The marketplace will be the final judge, but Microsoft is really motivated."
The company said the new initiative would eventually involve an investment beyond "Boeing's development of the 747 and NASA's first mission to the moon".