Microsoft Sets Its Sights on E-Commerce

In early March, Microsoft Corp. announced a new Internet commerce strategy that officials hope will bring more than 1 million new businesses online and into the Microsoft Internet Commerce fold.

In early March, Microsoft Corp. announced a new Internet commerce strategy that officials hope will bring more than 1 million new businesses online and into the Microsoft Internet Commerce fold. But with IBM Corp. and Sun Microsystems Inc. already in the spotlight, is Microsoft too late?

Perhaps recognizing this problem, Microsoft’s CEO Bill Gates compared his company’s Internet commerce strategy announcement with its Dec. 7, 1995, Internet Day announcement, in which Redmond fessed-up to missing the boat on the importance of the Internet. At the March announcement, Gates said, "The time frame for this is all pretty immediate, so in a sense this is like Internet Day, where we outlined a full strategy that had many elements, was aimed at a very ambitious goal. Here we're being ambitious, very ambitious, again."

Michael Putnam, an Internet commerce analyst with research firm Forrester Research (, notes that the Microsoft announcement does bear a striking similarity to the 1995 Internet Day announcement. "[This new Internet commerce strategy is] comparable in scope to their Internet Day announcement in 1995, and you’ll remember that it took them a couple of years to execute on that," he explains, noting that Microsoft unveiled a series of products that hadn’t been developed yet.

As part of its Commerce Strategy, Microsoft announced several new products and services, beginning with a plan to leverage the existing online service as an open Internet Commerce-enabled marketplace. Accordingly, Microsoft will use MSN to offer Web-site hosting services for small- to mid-sized businesses.

But the most significant aspect of the Commerce Strategy is BizTalk, an e-commerce framework and server component that Microsoft says will adopt Extensible Markup Language (XML) schemas and other industry standards to provide a "glue" of interoperability between disparate transaction processing, order entry and other back-end mission critical systems.

As a software technology, BizTalk will ship in the form of Microsoft BizTalk Server -- probably after the appearance of Windows 2000, sources speculate.

"Here with BizTalk, we've applied XML schemas to electronic commerce," Gates explained. "We're doing some really amazing work to take all of our tools -- our database tools, our development tools, the front-end Microsoft Office tools -- and allow them to navigate XML rich data." Microsoft indicated that it will incorporate BizTalk schemas into the planned MSN network of Internet services and into future versions of Office, BackOffice and Windows.

According to Tim Minahan, a senior analyst in electronic commerce at Aberdeen Group (, BizTalk is the most important piece of Microsoft’s e-commerce strategy. "The real strength of the announcement is BizTalk, which will rely on XML technologies to support both intra- and inter-enterprise application integration and interoperability," Minahan suggests. By Minahan’s account, Microsoft’s use of XML schemas as BizTalk’s key enabling technology could go a long way toward establishing XML standards on an industrywide basis.

Additionally on the software side, Microsoft indicated that it plans to introduce a new Microsoft Commerce Server, which is based on the existing Microsoft Site Server, Commerce Edition.

Microsoft also announced a number of initiatives with several third party independent software vendors, including PeopleSoft Inc. (, an ERP and business application software giant.

Accordingly, PeopleSoft announced that it selected BizTalk and other Microsoft technologies as a means to develop "key elements" of its PeopleSoft Business Network (PSBN). PSBN is an electronic business network that will deliver applications and content to end users through what it terms an "Enterprise Portal" -- the technology for which will be provided by Microsoft. ERP king SAP AG ( announced support for BizTalk as well, indicating that it will join in an expanded partnership with Microsoft to develop application connectors between Microsoft and SAP applications.

According to Minahan, other ERP vendors may follow suit, as BizTalk could be a boon for ERP systems as the backbone of Internet commerce solutions. "I would think [that other vendors would follow], and that’s the benefit of the announcement. Because [with BizTalk] they’re talking about open application integration and they’re not tying it to a specific platform," Minahan observes. "[BizTalk] could, in essence, interoperate with a Unix system or any other system, and that’s the benefit of XML schemas."

Microsoft additionally announced partnerships with MasterCard Int’l Inc. ( and Clarus Corp. ( to cooperatively market integrated Internet-based corporate purchasing solutions. The three companies hope to provide Internet buyers and sellers with a solution for integrated purchasing, payment and procurement reporting.

Because of Microsoft’s chronic delays in delivering many of its operating system and technology upgrades, David Baltaxe, a senior analyst in Internet commerce at Current Analysis (, is suspect of Microsoft’s ability to make good on many of the forward-looking aspects of the Internet commerce announcement.

"There seemed to be a fair amount of discussion about things that they will be doing as opposed to actual services that they’re going to make available immediately," Baltaxe points out, specifically noting that Commerce Server and BizTalk Server aren’t expected to appear until the post-Windows 2000 timeframe.

Forrester Research’s Putnam agrees, but notes that, vaporware or no vaporware, Microsoft seems to be as focused on dominating e-commerce as it was in dominating the Internet in 1995. "It is vaporware in the sense that they don’t have anything yet, and because they’re saying that a lot of these things are going to be just going into beta in six months," Putnam says. "But [the strategy] did seem to be concise and seems to be indicative of a real focus on Microsoft’s part."

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