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Rivals ready to counter Microsoft's foray into business services


© St. Petersburg Times, published September 16, 2002

IBM has a simple pitch to businesses looking for Web development services: Microsoft's not the only game in town.

IBM has a simple pitch to businesses looking for Web development services: Microsoft's not the only game in town.

In fact, Big Blue has had its WebSphere products on the market and operational since last year, says Stefan Van Overtveldt, program director for IBM's WebSphere. And that's more than Microsoft can say about its vaunted .Net initiative.

"If you go out to the Internet, the chances that you're using WebSphere are much higher than using Microsoft, by an order of magnitude," Van Overtveldt said. "Typically what we run up against is that quite a lot of people bought into Microsoft's marketing campaign and all the money they're spending on the media," creating the impression that .Net is fully functional and available.

Yet despite Microsoft's massive marketing machine, IBM says its research shows the WebSphere brand is as well known among business customers as .Net. Among its local clients are Publix Supermarkets and the Tampa Bay Devil Rays.

IBM isn't the only competitor that Microsoft faces in its push into Web-centric software and services. And competitors aren't the software behemoth's only critics.

Many of the same issues that dog Microsoft in the consumer market with its Windows monopoly carry over whenever the company ventures into new markets.

Some critics fear Microsoft wants to use .Net technology to monopolize life on the Internet, storing consumers' personal data, sending them mainly to Microsoft sites, eventually extracting a fee on every transaction between online merchants and their customers.

"No one in the world," David B. Yoffie, a professor at the Harvard Business School, told the New York Times, "wants to be in the position of IBM in the PC business." IBM popularized personal computing, only to watch Microsoft take control of it.

Despite the dot-com meltdown, the competition to be a key player in the development of the Internet continues to be fierce. For some businesses, particularly large ones, it means taking systems and data that they've used for years and making it accessible on the Web. That transition, they hope, will mean more efficiency and better customer service, without losing their considerable investment in time and money in the older technology.

Van Overtveldt gives this example: Years ago, a financial services company was handling a business' retirement plan. To get an account update, an employee would have to call or write to request it, the financial services company would have to look up the information and someone would probably mail it.

Now, that financial services company can put the information online. The employee can create an account, user ID and password and have up-to-date access to the information any time.

In the technology wars, each company is saying it has the best technology for businesses to accomplish those goals. In reality, many businesses will end up using products from more than one.

Paul Roth, chief technology officer at CommerceQuest, a computer consulting and systems integration company in Tampa, talks about a carpenter wearing a belt with a hammer, screw driver, wrench and other tools.

"Depending on your business requirement," Roth said, "you pull out your Microsoft tool or IBM tool or Sun or BEA tools and you do your job. It's hard just to have a wrench and be a carpenter."

IBM has placed a WebSphere Innovation Center at CommerceQuest, allowing potential customers to test-drive the software. But CommerceQuest deals with other technology, too, including .Net, Roth says.

"What's driving the decision? Is it technology led, or business led?" Roth said. "Unfortunately, a lot of times technologists make decisions about things they're more comfortable with instead of business decisions."

Unlike the PC desktop market it dominates, Microsoft has strong competition in the business market. "The bigger challenge for Microsoft is the perception that Microsoft has never been ready for the big enterprise" market, said Simon Yates, research director at the Hurwitz Group in Framingham, Mass. It's seen as more capable of handling smaller, department-level technology.

"The big U.S. companies are not going to say, 'Get rid of IBM, BEA and Oracle' " and replace them with Microsoft, Yates said.

Part of the concern about .Net comes from the way Microsoft rolled out the the Passport identity system. Microsoft touted it as a voluntary, user-friendly authentication system so consumers could sign in once and not have to repeat the routine at different sites.

Yet not everyone looked at it as voluntary because Microsoft tried to require people to sign up if they wanted to use services such as its free Hotmail e-mail and Instant Messenger. It even used popup reminders about Passport when people first start using Windows XP.

Consumer and privacy groups have been busy scrutinizing, and filing complaints about, Passport. In an August settlement with the Federal Trade Commission, Microsoft agreed to tighten security for Passport after a number of groups, including the Electronic Privacy Information Center, accused the company of exaggerating promises about the safety of its online service.

Chris Hoofnagle, legislative counsel for the Electronic Privacy Information Center (, said the group also is looking at similar systems from the Liberty Alliance and America Online.

But "Passport is definitely the riskiest," he said, partly because of Microsoft's market dominance and mostly because large centralized databases are ripe for misuse of personal data.

The Liberty Alliance (, which includes Microsoft rivals Sun Microsystems and America Online, was created as a counter to Passport to develop an online identity system with open standards that all could use.

But even companies that support open standards for Web technology add "their own features that make it difficult to move from one to another without code rewriting and spending a lot of money," said Yates of Hurwitz. "In the end, they still want each of their big customers to build around their platform."

-- Times news researcher Kitty Bennett contributed to this story, which includes information from the New York Times.

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