Gates: BackOffice a rising star

SEATTLE--Microsoft BackOffice--a suite of enterprise or high-end programs that runs atop Windows NT--is a rising star that is likely to join Windows 95 and 98, Windows NT, and Office 97 as a future revenue driver, company CEO Bill Gates told a group of financial analysts today.

"BackOffice will join the big three, no doubt," Gates said in a question-and-answer session. Sales of Windows, Windows NT, and Office now account for some 75 percent of Microsoft's revenues. He added that Microsoft's portal, formally called MSN.com, and a scaled-down operating system for consumer devices also are likely to generate significant revenues in the coming years.

As reported earlier, Gates reaffirmed the software giant would allot more than $3 billion for research and development in fiscal 1999, which started July 1. The R&D money will be devoted to collaboration, graphics, and distributed computing technologies.

Other top Microsoft executives took the stage here at the company's annual financial conference to forecast an optimistic outlook peppered with a liberal dose of caution.

"Fiscal year '99 will be a hell of a lot tougher" than previous years, warned Microsoft chief financial officer Greg Maffei. It is "very scary in terms of how our business will operate in '99 vs. '98."

Maffei cited a host of factors responsible for the lower growth, including economic woes in Asia, growing demand for computers priced under $1,000 that tend to carry fewer Microsoft programs on them, longer revenue cycles, and growing research and development costs.

To compete, Microsoft will have to provide better service to customers and make computing simpler, said Steve Ballmer, who was named the company's president earlier this week. Echoing themes discussed at last year's conference, Ballmer touted the emerging "digital nervous system" and the "Web lifestyle" that will help drive future sales.

"Networks of computers can become a fundamental part of the way businesses make decisions and think," he said, adding that consumers are likewise turning to the Internet as a way to communicate and learn.

Microsoft chief operating officer Bob Herbold also addressed the analysts, outlining for them the efforts Microsoft has taken to counter negative publicity created by lawsuits filed by antitrust enforcers.