Applications Battlefield Mid-Year Scoreboard
- August 27, 2002
Part 2: Microsoft
market has recently witnessed a number of high-profile announcements of
stalwart vendors in the enterprise applications space. Given the contrasting
nature of these announcements, from impressive to disappointing financial
performances on one hand, and from new acquisitions and/or job openings
to massive layoffs on the other hand, it becomes painfully obvious that
the overall picture largely consists of many shades of grey.
is a four-part note covering large and small ERP vendors, scoring their
progress during these unsettled times.
One discussed recent financial results of:
part discusses the Market Impact on Microsoft. Part Three will cover the
Market Impact on IBM. Part Four will cover the other ERP vendors, CRM,
SCP, and make User Recommendations.
boy, was that a quarter to report within! While size and diversity (i.e.,
the completeness of the offering) should help particularly throughout
the slump period, the devil will inevitably be in sustaining the growth
and in eventual lack of nimbleness for the likes of Microsoft and IBM
gigantic sizes. Still, the results from providers of strategic infrastructure
that have more technology irons in the fire have typically proven better
lately, if not spectacular, with one hoping these would even spark new
spending in the enterprise arena. Some indications indeed hint that a
steady increase in investment in strategic infrastructure, across vertical
industries and by companies of all sizes, will intensify going into 2003.
that end, Microsoft reported solid results and gave a great deal of credit
to its activity in the enterprise segment, especially server products,
consisting of Windows NT/Windows 2000 server and .NET enterprise
server products. While Microsoft dominates the markets for PC software,
desktop operating systems & applications and Web browsers, and while this
segment still accounts for the largest share of its revenue, it is the
slowest growth area notwithstanding.
is therefore becoming a huge force in other aspects of software and computing,
such as consumer computing, consisting of MSN/Web properties, forays
into interactive TV, mobile and gaming markets. This is the smallest segment,
yet it is growing fast and holds the most potential, keeping Microsoft
partly insulated from the business downturn because it makes consumer
products such as the Xbox game platform. And, all its products are typically
cheaper than the competitive counterparts, which particularly helps during
the times of depressed budgets.
is a no-brainer that Microsoft is getting quite serious about the enterprise
applications market too, evidenced by its Microsoft Business Solutions
(MBS) division (just by the sheer magnitude of the Great Plains
and Navision acquisitions' costs, let alone by the ongoing biggest
R&D investment within the applications market), and by its attempts to
deliver its own CRM product and thereby cultivate the fertile small enterprises
ground, where CRM penetration is far less than 10%. Also, since Microsoft
has long earned strong brand equity and accompanying user loyalty within
the small business market segment with its other desktop and office applications,
one should expect firms with less than 100 users to readily adopt Microsoft's
simple, Outlook-centric CRM and other business management software.
like it or not, Microsoft has even recently claimed the title of an industry
visionary, the latest hiring initiative showing the company's intent to
rely increasingly on internal R&D and innovation. The company still remains
aggressive, with growth in mind — which requires aggressive moves into
new areas in order to grow over huge customer bases. Therefore, with the
blitz of all the recent hoopla surrounding Web services in its .NET strategy,
Microsoft seems to have kept its Java archrivals on their toes
.NET strategy is Microsoft's view of harnessing Internet based on eXtensible
Markup Language (XML), Simple Object Access Protocol (SOAP), and it is
a view of the next-generation Internet computing environment as consisting
of Web Services accessed by devices that interact with other services
and content applications. As to achieve the proof of concept for its .NET
and Web Services initiatives, Microsoft has had to entice enterprises
to adopt its vision, architecture, and essential products and it has had
to rally many other software vendors to build complementary solutions
and/or to make their existing products .NET-compliant.
released Visual Studio.NET (VS.NET) might be the technology
trump that should help Microsoft in its above cause and to put it at least
head-to-head with the opponent Java technology. VS.NET may finally provide
Microsoft with a tool to compete on an equal footing with the formidable
Java community. Therefore, look for Microsoft to become an up-and-coming
powerhouse in the overall enterprise applications market.
to accomplish that feat, Microsoft has to concurrently garner sufficient
experience in the enterprise level business application market, a vertical
industry savoir-faire', and a notable system integration partnership
(which might force the company to consider buying a high-profile consulting/system
integration firm similar to IBM's acquisition of PwCC, rumors about
Accenture being the target abounding lately). Consequently, it
has not developed a strong mind-share among the C-level executives (decision
makers) at the larger corporations.
in addition to the always residual resentment in the market for alleged
monopoly practices, and for often controversial licensing deals and software
security issues, Microsoft's ambition will be its greatest challenge too,
as it is concurrently experiencing another almost disruptive technology
transition similar to the transition from character-based DOS to
graphic-based Windows OS platform on the PC-based infrastructure of early
1990s. Nowadays, it is about the transition from Windows to .NET, using
Internet rather than PCs.
the company is engrossed in a gigantic task of transforming Internet from
a presentation-only to a programming medium as well by promoting open
standards based Web Services, its applications competitors/partners have
solely been focused on their core competencies (i.e., product functional
footprint). There has also been much confusion about .NET as a next generation
of Windows, as well as about its progress so far.
term ".NET application" also remains at least as vague as the term ".NET."
First, it seems that .NET is a platform strategy although at a higher
level than Windows OS, which is a platform itself. Second, the question
whether ".NET applications" only leverage .NET Web services, or whether
they are applications that provide .NET Web services, or both, cannot
be answered that easily either. Confusion is further aggravated with the
term ".NET" being associated with products like Enterprise Servers (e.g.,
SQL Server, Exchange Server, InterBiz Server, etc.).
Consequently, .NET remains a humongous work in progress while the development
tools and basic standards support have been mastered, the rest of the
infrastructure needed to support Web services is still outstanding — such
as real-time communications capabilities, secure authentication, reliable
transactional messaging and a single data store technology.
.NET infrastructure still today consists mainly of retrofitted products
and XML add-ons, which have merely been renamed and not closely integrated.
The last but not least challenge remains to keep its tools easy to use
while concurrently enabling developers to perform more complex tasks in
distributed computing environment.
concludes Part Two of a four-part note scoring the major ERP vendors in
these difficult times. Part One
covered recent developments for these vendors. Part Three will discuss
the Market Impact on IBM. Part Four will cover the other major ERP vendors,
CRM, SCP, and make User Recommendations.