Why Microsoft needs IBM this time around

It's a rare and momentous occasion when IBM and Microsoft share a stage to announce a new joint venture.

As far as anyone can recall, the last time the bitter rivals came together--prior to this week--was more than a decade ago, just before the two companies had a legendary falling out over PC operating systems.

You might remember OS/2, which the two computing giants hyped relentlessly as the future of the industry back in the late 1980s. Famously, Bill Gates once wrote that OS/2 was "destined to be the most important operating system, and possibly program, of all time."

IBM, which once paid its software programmers per line of code written, needed Microsoft's more limber development team to make OS/2 a success.

But not long after Gates wrote his words of support, his company dropped OS/2 development like a bad habit, and instead poured its resources into the development of Windows NT. That sealed OS/2's fate as a historical footnote and set the stage for Windows' eventual dominance.

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So what are we to make of Wednesday's joint commitment by Gates and IBM software chief Steve Mills to cooperate on so-called advanced Web services standards? Clearly, both companies have a lot on the line. Each has committed millions, if not billions, of dollars on Web services product development. And each has cooperated, along with Oracle, Sun Microsystems and others, on the core Web services standards already in place.

The party line is that the companies are cooperating for the greater good. They are also cooperating for their mutual benefit: Standards help to lay the foundation for applications built using each company's proprietary technologies. As Mills said last week: "There are huge opportunities for making money here."

Sources said Wednesday's press conference was hastily arranged by Microsoft, which drove the agenda and appealed to IBM?-one of Microsoft's largest Windows resellers--for support. It seems that this time, unlike back in the OS/2 days, it's Microsoft that needs some help.

Gates and company may fear that Microsoft's .Net Web services message isn't taking sufficient hold in big companies that are increasingly wary of vendor lock-in.

Gates and company may fear that Microsoft's .Net Web services message isn't taking sufficient hold in big companies that are increasingly wary of vendor lock-in. The company's Web services technology is the cornerstone of its future products. A decision to go with .Net is a decision to buy Windows. But for the past few years, .Net and Java have been neck-and-neck in popularity, and the majority of Fortune 1,000 companies have wisely invested in both strategies.

Web services has become a popular way to link internal IS technology. But the big payoff-?the painless linking of systems for cross-company supply chain applications so slickly displayed in Microsoft's ad campaigns, for instance-?still hasn't happened in large part.

From Microsoft's perspective, part of the problem may lie in earlier missteps with .Net's marketing. Microsoft slapped those three letters on virtually all of its products and blurred the line between pie-in-the-sky consumer pipe dreams and nuts-and-bolts business applications. The company has now mostly walked away from that plan, and .Net lives on mostly as a development tool brand name.

And CIOs seem more willing than ever to entertain Microsoft alternatives, like Linux, despite the company's mea culpa over botched licensing plans and Windows security breaches.

		News.commentary IBM, Microsoft's Web services sing-along The two companies have pledged allegiance to software standards. Is their commitment to Web services standards real? Yes.

The bottom line is that Microsoft needs IBM to legitimize .Net and its entire development plan as a truly cross-platform strategy. IBM's openness is in sharp contrast to Microsoft's historical Windows-only agenda. A Microsoft strategy that, for once, doesn't ignore the market reality of heterogeneous IT departments is a good start.

You can argue that Big Blue has something of a tin ear when it comes to product marketing. But the company has made wise bets on technology in recent years, including its commitments to Java, Linux and open source, for starters. To lend credence to Microsoft's Web services plan--ostensibly built on a vendor-neutral integration technology--Gates needs to align .Net with IBM's greater appeal as an "open" technology provider.

And it's no coincidence that Gates and Mills shook hands just a few weeks before Microsoft's Professional Developers Conference in Los Angeles. The show is the company's largest forum for convincing its most important audience, software developers, to adopt new Web services technologies that can help drive demand for Windows.

So is the cooperation between IBM and Microsoft for real this time, or is it OS/2 all over again? If Microsoft bolts when its proprietary interests come into play, we'll have our answer. But if Microsoft truly has become a wiser company post-Judge Jackson, it will do the right thing and continue to hammer out new standards, despite competitive differences, that benefit the industry at large.