Commentary: Microsoft, eBay ally around .Net

At the heart of the Microsoft-eBay alliance announced Monday is an understanding by both companies that the Web is moving to a new model in which applications are delivered as component services and presented to users through a Web site portal model.

However, unlike other "strategic partnerships" in which one vendor simply endorses the technologies of another, this alliance provides benefits to both parties, making it much more likely that users will see real impact as a result.

As part of the agreement, eBay will migrate to the .Net platform and provide its community-based auction engine to Web developers as XML-based .Net services. The agreement also calls for Microsoft to integrate eBay's marketplace into a number of its Web properties.

The partnership with Microsoft not only provides a technology framework to create and deliver these services but also provides an outlet for these services. Microsoft's combined Web properties (MSN, CarPoint and so on) collectively rank No. 1 in Web site traffic.

By offering elements of its auction model to Web site developers as SOAP-based XML services, eBay hopes to become a critical e-commerce engine behind a wide range of Web sites. This model provides the potential, as yet unrealized, for eBay to profit from e-commerce transactions besides those performed on the eBay site. This illustrates that Web services are gaining traction and will begin to create a technology base that supports collaborative computing. eBay can be an auction service and compete readily with the marketplace players by providing an API to support a company's auctioning needs.

A showcase for .Net
From Microsoft's perspective, the arrangement provides a showcase for .Net technologies and an alliance with one of the most prominent surviving Web companies. Support by ISVs and major Web sites such as eBay is critical for .Net to establish itself as the dominant model for creating next-generation Web service components.

	See news story: Microsoft, eBay form e-commerce alliance

Immediately, Microsoft gains not only a showcase but also an early customer and a boost in traffic to its Web sites. More important, it starts to build momentum for the .Net technology. We expect additional partnerships and announcements as Microsoft continues its .Net push through 2001.

Microsoft clearly understands that the company controlling key platform technologies and related ISV interest is the company that can dominate a market. In the DOS and Windows days, this meant controlling operating-system APIs, but today the platform is defined by the tools for building Web services.

Although Java-based application servers and related technologies have been at the leading edge of the Web phenomena, Microsoft's .Net technology is increasingly becoming a viable alternative. On one hand, Java is stronger because it doesn't drag in as many services by default, while Microsoft has more of a cascading model. On the other hand, Microsoft has a richer meta-model than Java, which will ease the way for declarative programming models and support for pluggable implementations. In the end, most developers are going to care more about how easy it is rather than which pieces of the framework get dragged in.

Toward new business models
Although the technical battles between .Net and the Java world are important, the real battle is for the definition of new business models that will make service-based component development viable. In the longer term, the eBay relationship may provide a foundation for the business model needed to support the emerging component software and services market.

Defining partnership and distribution models is an area where Microsoft has traditionally excelled, and as the company turns its attention to establishing key business partnerships and distribution models to support the new Web-based service model, .Net looks even more attractive. However, unlike previous operating-system battles, even if Microsoft "wins" with .Net, the Java world will not be shut out. For example, from a services perspective, once eBay implements a .Net Web service "API," these services will be available to developers using either Enterprise Java Beans or Microsoft technologies.

Users should expect further moves by Microsoft as well as the competing Java camp as both the technologies and business models evolve to support the Web-based component services. Those companies with Web sites that could benefit from auction services should look to the .Net-based model as the easiest route to accessing the eBay commerce engine.

Meta Group analysts Peter Burris, David Cearley, William Zachmann, Mike Gotta, Thomas Murphy and Jack Gold contributed to this article.

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