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March 13, 2000

Balancing Act
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At the official kickoff for Windows 2000 in San Francisco last month, Bill Gates, Microsoft's chairman and chief software architect, admitted as much. "On the desktop, people understand--Windows has got the applications, it's got the critical mass," he said. "But there was always a question: Should you grow up from that Windows base for these Internet servers, or should you take the mainframe approach?"

Honeywell International Inc., the $23.7 billion aerospace, controls, and materials manufacturer created by a December merger of Honeywell Inc. and AlliedSignal Inc., is betting its MyPlant.com Internet marketplace on Microsoft technology, figuring that the vendor that supports its traditional apps will be best at helping Honeywell deliver software over the Web. Microsoft last month made an undisclosed investment in the exchange. "If Microsoft is able to take their successful disk-and-manual software business and move it to the Web, we want them to do to us what they're doing to themselves," says Russ McMeekin, corporate VP of E-business at Honeywell, in Morristown, N.J.

Honeywell years ago began writing real-time control systems for oil refineries and chemical plants on Windows NT. When processes in customers' plants fall out of spec, consultants visit the sites to install diagnostic and corrective software, a process that costs Honeywell's customers thousands of dollars, McMeekin estimates. Since plants need to run these applications only a few times a year, Honeywell plans to reduce its customers' costs almost tenfold by offering the diagnostic apps on a subscription basis through MyPlant.com. Hosting these services on Windows 2000 servers lets Honeywell move these apps to the Web without changing APIs and mobile device standards, McMeekin says. Honeywell also hopes to sign up new participants in MyPlant.com through Microsoft's bCentral small-business Web site.

At the very least, Windows 2000 puts Microsoft in the E-business game. The vendor has built into the operating system a set of features designed to address the complexities of conducting business online: Servers must interpret, route, and present data from disparate systems that reside inside a company and at customer and supplier sites.

Windows 2000's COM+ transaction monitor manages database connections, offloading work and resulting in faster performance of SQL Server. Windows 2000 Advanced Server--the most robust edition of the product available--introduces network load balancing, which distributes requests for Web pages across as many as 32 servers, speeding site performance. A new version of the Active Data Objects programming interface is capable of calling non-Microsoft databases, promising to ease integration between Windows and legacy systems. And the latest iteration of Internet Information Server runs faster than the one in NT 4, customers say. Microsoft puts the performance gains at 75% for static Web pages and 250% for dynamic Web pages created on the fly from a database. That's all available out of the box, and it's an improvement over NT.

Microsoft's integration of the COM+ transaction processor into the operating system afforded VirtualBank, an Internet consumer bank in Palm Beach Gardens, Fla., time-to-market advantages by letting the new company quickly write business-logic objects that scale across its servers. Chief technology officer John Studdard says the company began a year ago as "five guys in an office and a clean sheet of paper." Deploying business logic across multiple servers using Windows NT 4's Microsoft Transaction Server was "clunky," he says--it required "a lot of complex security administration and configuration."

Photo by Tony Arruza CEO Rory Brown says the Internet bank, which went live last month, came to market with the idea that it could outmaneuver rivals that outsource or are tied to legacy systems by processing all lending in-house. That increased the pressure to bring products to market quickly and cheaply. Now that COM+ affords his company the quick development time it needs, he says, he can take advantage of the fact that Windows developers are cheaper than others.

Delivering effective middleware is also critical to Microsoft's success as an E-business software provider, says Mike Gilpin, an analyst at Giga Information Group. This middle tier of a Web application runs the components that contain a company's business logic--algorithms that calculate tax rates and shipping charges, for example, or pair products with accessories. Most large companies prefer to use application run-time environments based on non-Microsoft technologies such as Corba, Enterprise JavaBeans, or BEA Tuxedo--even if Windows is the operating system underneath it all, Gilpin says. That's because Microsoft's Component Object Model application layer hasn't been sufficiently scalable; Windows 2000 could erode that preference to the point where half of large companies develop using COM, Gilpin predicts.

Microsoft says Windows 2000 brings "PC economics" to the data center, letting users add low-cost servers to their IT systems as Web transaction volume builds, rather than paying for expensive Unix systems up front. Yet many of the features Microsoft touts as key to its ability to compete with Sun--support for 32-way systems, component load balancing, increased database scalability, and XML data transformation--remain undelivered.

"They're not done yet, but they're on the right path," Gilpin says. "On the one hand, they want to prepare the market for Datacenter and begin to generate demand, but on the other hand, they don't want to do anything to suppress sales of what they have today."

Until Datacenter Server ships, Microsoft is touting Advanced Server as the best tool for running Web-commerce applications. Application Center 2000--expected this summer--promises to reduce the administration needed to bring new servers on line to share the load of a Web application. Gilpin says Datacenter Server's increased reliability--Microsoft has tightly controlled the list of compatible hardware and peripherals--coupled with Application Center's component load-balancing features, will provide "a much richer environment for E-business."

Microsoft is also banking on XML. Ballmer calls the technology the "backbone" of Microsoft's development efforts. In the client-server world, Windows' residence on most desktop PCs meant software developers had incentives to write their applications for Windows first. But Internet computing, which is based on common protocols, makes the client-side operating system less relevant. As a result, Microsoft needs to deliver an integrated operating system, middleware, and developer tools that provide speed or cost advantages to developers writing Web apps for Windows. What's more, a central challenge of selling online, particularly for brick-and-mortar companies, is reshaping data from legacy enterprise resource planning applications for presentation over the Internet.

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