InformationWeek

Microsoft's Net Gains

New Internet initiative includes browser bundles, alliances with AOL and SAP, a Java license, and Net-enabled OCX controls

By Clinton Wilder, John Swenson , and Rich Levin
Issue date: March 18, 1996

If words were deeds, Microsoft already would dominate the Internet. For months, the software powerhouse has promised to embrace the Net in every way possible-and has, with great fanfare, unveiled a variety of strategies to accomplish that ambitious goal. But Microsoft still trails companies such as Netscape Communications and Sun Microsystems when it comes to Internet innovation and market share.

Last week, Microsoft tried again. It rolled out yet another strategy for the Internet and corporate intranets, and this time the company put some flesh on the bones. In announcements made in front of 4,500 friendly software developers at the Microsoft Professional Developers Conference in San Francisco and at the CeBIT trade show in Hannover, Germany, the company said it:

Will bundle its Internet Explorer 3.0 Web browser into its Windows operating systems for free. "All a user does is buy Windows," says Microsoft chairman Bill Gates, "and the browser is there."
Has completed a deal with Sun to license the Java Web development language, and will meld it with existing application development tools such as Visual Basic.
Plans to release ActiveX OLE controls, formerly called OCX control s. These will let OLE objects power Web applications as well as Windows applications.
Has formed an alliance with SAP, a leader in client-server business applications, to develop common standards for using the Net to conduct business transactions.
Will embed the online service of former rival America Online in Windows 95. In exchange, AOL will make Microsoft's Web browser the default browser for the company's 5 million subscribers.

Microsoft's battle for browser market share is the centerpiece of its entire Internet strategy-and with good reason. Some 70% of 300 corporate Internet decision-makers recently predicted that Web browsers will become the universal graphical user interface for all of desktop computing, according to a survey to be released next month by market researcher Business Research Group in Newton, Mass.

"This is just the beginning for Microsoft," says Greg Cline, program director at the Business Research Group. "They've started a long process to increase their prominence in the Internet arena, and you will see them leverage their operating system and their distribution channels to the hilt."
Of special interest to corporate users is the plan unveiled at CeBIT by Paul Maritz, group VP for platforms at Microsoft. The company will work with SAP to develop common standards for using the Internet to conduct business transactions. In return, SAP will use Microsoft's Internet Information Server, Merchant Server, Internet Explorer, and ActiveX technologies.

"With Microsoft and SAP working together, we will bring wider acceptance of the Internet as a business system," says Paul Wahl, chairman of SAP America. Wahl expects SAP and Microsoft to have specifications available for common interfaces by year's end. SAP will work with Microsoft and the Open Applications Group, a consortium of software providers, to develop a standard applications programming interface.

At CeBIT, SAP demonstrated how its R/3 manufacturing suite can be acces sed through the Internet to handle business-to-business and customer-to-business transactions such as order entry, product pricing, and verification of product availability.

Wahl's predecessor, Klaus Besier, who left SAP in January to head Business@Web, an Internet development company in Cambridge, Mass., calls Microsoft's latest moves an effort by Gates to play catch-up in Internet commerce applications. "The marketplace will decide who has the better product," he says, noting that Microsoft is coming about a year late to the Internet browser party.

"Our solutions plug into the Netscape browser, which has 75% of the market." Business@Web responded to the Microsoft-SAP deal a day later by announcing a pact with SAP competitor Baan Co. to use Business@Web software to enable its applications software to work on the Net.
For corporate applications developers working with OLE, the ActiveX controls dispense with the need for OLE controls to feature a user interface. Mak ing the interface "optional equipment" means ActiveX controls can be hosted in desktop PC applications, on network servers, or within HTML documents. The Internet, in essence, becomes an integrated resource within an application's workspace.

"ActiveX makes the whole OLE/OCX thing viable on Internet Web pages," says Tracy Corbo, an analyst with market research firm International Data Corp. in Framingham, Mass. "The idea of a separate browser and a file manager eventually goes away, and you have one interface. Before ActiveX, developers had to create separate local and Internet modes if they wanted to provide Net connectivity. Now, they can develop a single application."

Some vendors that want their business application to run on the Web hail the technology. "With the Internet, we have this artificial dividing line between what's on the Net and what's not on the Net. It's stupid," says York Baur, VP of product marketing at Wall Data, a connectivity softw are company in Redmond, Wash. "The ultimate client is the one that, using this [ActiveX] object technology, can encompass anything on a network, regardless of whether it's the Internet or a proprietary network, or anything that lives on your system."

The first user program to include ActiveX support is the Internet Explorer 3.0 Web browser, which will ship in final version by summer.

Microsoft also unveiled plans to fuse both Windows NT and Windows 95 to the Internet by year's end. Microsoft will integrate Internet Explorer into a Windows 95 add-on, code-named "Nashville," in the second half of the year, making it an integral part of the operating system so it can be used to browse a PC's hard disk as easily as it can be used to browse the Net. With Netscape's Navigator software the current choice of about 75% of Web users, Microsoft hopes to achieve a dominant position in Net-centric computing by giving PC users a single interface point-Microsoft's, of course-to access a ny information or application, whether it resides on the Web, a corporate intranet, a LAN or a computer's own hard disk.

But some corporate users say Microsoft's strategy of embedding its browser won't win the Internet desktop war unless Explorer's functionality is clearly superior. "People won't buy Windows just because it has the browser," says Neil Pitts, manager of public online services at Eastman Kodak Co. in Rochester, N.Y. "The only differentiator will be functionality."

Bundling a browser into the Windows operating system isn't an automatic winner. "Remember, it's not a Windows-only world," says Patrick Delmore, creative director at Medtronic Inc., a $2 billion medical implant device manufacturer in Minneapolis. "We do a lot of internal and external Web site development on the Macintosh. Netscape has a lot of momentum; if they continue to add functions, it will be hard for Microsoft."

Meanwhile, Microsoft says it has finally completed the deal to license the Java Web development language from Sun-more than three months after announcing it would do so. Microsoft will meld Java with many of its existing development tools such as Visual Basic in an integrated development environment called Jakarta, which is due to ship at mid-year. Based on Microsoft Developer Studio, Jakarta also will host Microsoft's ActiveX OLE controls.

--with additional reporting by Doug Bartholomew

See related story on Microsoft "Microsoft, AOL Make A Deal"

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