Drawing the line in NT integration
What if the Justice Department turned its antitrust focus toward the company's booming server-side efforts, which target businesses?
Although the corporate operating system has not fallen under antitrust scrutiny, Microsoft executives have made clear that its growth will be driven by adoption of Windows NT, which is offered in workstation and server versions. Even its future consumer operating systems will use an NT code base, according to the company.
In the corporate world, Windows NT is enjoying wide
adoption as an alternative to Unix-based workstations. On the server side of the market, Microsoft continues to build more services into the software to encroach on the huge installed base of Novell NetWare, IBM OS/2, Unix variants, and other older systems.
At present, NT is far from a dominant force in the corporate computing industry. Microsoft is still wrestling with the basic needs of an industrial-strength operating system, such as stability, so that the software does not crash during routine operations.
Nevertheless, there are rumblings among the various factions in Microsoft's legal battles that the nature of the initial case covering the integration of Internet Explorer and Windows 95 could extend to other parts of the sprawling software firm's business.
"It's a much more problematic issue for regulators to delve into because Microsoft does not have nearly as dominant a share on the server as they do on the desktop," noted Dwight Davis, Microsoft analyst with Summit Strategies. "They don't have a monopoly share by any measure."
International Data Corporation pegged sales of Windows NT Server at nearly 1.3 million copies for 1997, a number that is expected to more than double to exceed 3 million copies by 2002.
The base NT server operating system includes the Internet Information Server (IIS) Web server software, Index Server for cataloging files, FrontPage for creating and managing Web sites, and support for network connection protocols.
The Enterprise Edition of NT adds Microsoft Cluster Server software for "fail-over" capabilities between two server machines when one crashes. It also includes Microsoft Transaction Server, Microsoft Message Queue Server, and support for eight-way systems.
Much like Microsoft's strategy for client software, the company also sells a set of server-side applications targeted at business customers called BackOffice. The package includes a copy of Windows NT server, all the elements found in the NT Enterprise Edition, as well as Certificate Server, the Exchange Server messaging system, Proxy Server, SNA Server for connections to IBM networks, the SQL Server database, Site Server, Systems Management Server desktop management tools, and Crystal Info from Seagate Software.
Who should be worried by all of this server-side activity? Netscape Communications is one company that has undoubtedly been hampered by Microsoft's free bundling of a Web server with NT. Oracle continues to feel pressure from Microsoft's SQL Server database discount pricing as well as the inclusion of separate functions within the SQL Server software.
Unix systems giant Sun Microsystems is among several merchants pushing server-based alternatives to NT that provide more industrial-strength features. Monolith IBM also competes in markets Microsoft is targeting, though some might give IBM the upper hand in that battle because of its gargantuan customer base and revenues.
The laundry list of NT and BackOffice components does not include other server elements from the company due in the near future or when NT 5.0, a widely anticipated upgrade, ships early next year.
There is a large effort within the Redmond, Washington-based campus to build directory services technology into NT. Work is also under way to deliver video streaming within NT servers. And the company continues its efforts to add networking and communications capabilities to its corporate operating system.
And it should be noted that various other server-based operating systems bundle technologies with the base product, though some would argue that none provides the set of services planned for Windows NT.
To understand how Microsoft is using the NT operating system and associated applications to offer a "one-stop shop" approach for server systems, one has to look no farther than the software services that allow database systems, such as the company's SQL Server, to process queries in a timely manner.
Data warehousing and transaction processing are two areas where Microsoft is investing plenty of time and money further integrating once-discrete products with Windows NT and its other applications.
On both fronts, Microsoft is making what has been extremely complicated and expensive software relatively cheap and much easier to use. That's been the company's modus operandi since its early days in the PC software business.
On the data warehousing front, Microsoft said last week it plans to offer a new online analytical processing server (OLAP), code-named Plato, as an integrated feature of its upcoming SQL Server 7.0 database, at no additional cost.
That's a direct volley aimed at Oracle, which sells its OLAP software as an extra-cost add-on to its database server. The announcement is also bad news for smaller players in the OLAP business, such as Arbor Software and Information Advantage, analysts said.
In transaction processing, Microsoft is melding transaction processing services, currently included with its Transaction Server software, into the next version of its COM component architecture. The integration should make it much easier to build the server side of Web and client-server applications that use a transaction processing layer to manage traffic between client systems and back-end databases.
The transaction processing integration could give Microsoft an advantage over other application server software vendors such as Netscape, Oracle, Inprise (formerly Borland International), and IBM.
The base transaction services being woven into NT 5.0 also may mean that users will be less likely to spring for additional transaction software from competitors.
The difficulty, should any sort of antitrust action ensue over Microsoft's integration of arcane server technologies into Windows NT and BackOffice, will be in making a fair competitive analysis, analysts said. OLAP servers and transaction processing components are very complicated pieces of technology, much more complicated than Web browsers, one analyst said.
"In the current Microsoft antitrust case, the products being compared, like browsers, are an apples-to-apples comparison," said Don MacTavish, an analyst with the Meta Group. "But it's harder to do that in the OLAP space. Other vendors have unique features that Plato doesn't offer. Browsers are very alike. OLAP servers are not," he said.
Furthermore, many belive that software must remain open so that customers do not feel locked in by a particular company. "Microsoft fundamentally has to keep NT an open system," Summit Strategies' Davis said.
Another fundamental premise found in the information systems departments of corporate America is that once software and systems are installed and running they're often not altered for several years--a practice that flies in the face of the typical upgrade cycle found in the desktop world Microsoft is used to.
"Microsoft's business model is buy it once, then buy it again 15 months later," Dan Kusnetzky, program director for operating environments and serverware at IDC, said at a recent conference. "This model is sort of in direct conflict with how IS runs its world."
In the end, some say, the server software business remains too dynamic for regulators to get an appropriate handle on the market and proceed with a case.
"You don't necessarily have the initial rationale to spark the investigation," Davis said. "It's hard to conceive of a rational way to draw the line on the server side."