CNET también está disponible en español.

Ir a español

Don't show this again

#BlackoutTuesday Facebook employees stage virtual walkout PS5 event delayed Apple stores close amid widespread protests Rick and Morty season finale Father's Day gift guide

Microsoft in perilous e-commerce waters

Bill Gates bets that integrating his company's e-commerce software with its online services will help him succeed where Netscape has failed.

Microsoft's ambitious new plan for e-commerce envisions knitting together widely divergent businesses, a task no other company has managed to achieve.

The master scheme, unveiled today with the announcement Microsoft has bought database company CompareNet, incorporates software, online services, company stores, and media properties into an all-encompassing package centered around its consumer-oriented MSN portal site.

To date, only rival Netscape Communications has tried to link its e-commerce software with its Netcenter portal, an effort that has largely failed. Like Netscape, Microsoft faces strong competitors and a shifting Internet commerce landscape, though no one is betting against it yet.

Complicating Microsoft chairman Bill Gates' task is his company's insistence on having its own online retail businesses: travel agency Expedia, finance site MoneyCenter, and car site CarPoint, which compete with the same companies Microsoft is trying to sell on its back-end software.

Nevertheless, the new strategy is a strong step forward for Microsoft, which has been a laggard in the e-commerce market, according to analyst Vernon Keenan of KeenanVision.

"Their real competition is the portals, not the traditional competitors," he said. "In the portal battles, this positions them better to compete with AOL, Lycos, Excite, and Netcenter."

David Readerman, a stock analyst with Thomas Weisel Partners, called the announcements "an important update" because Microsoft has lately been quiet on e-commerce.

"It's good to see Bill talk about products, not litigation," he said.

The software giant is adjusting to recent moves by Sun Microsystems, Netscape, and America Online, Readerman said, alluding to a complex and still-pending deal that has AOL buying Netscape for $4.6 billion and then partnering with Sun to market Netscape's enterprise software.

The move may also be a diversion, Keenan suggested, since Microsoft hasn't made any significant product releases since Windows 98 and upcoming Windows 2000 has been hit with delays. "I'm worried that it might be typical vapor, it might be a preemptive strike," Keenan said.

"What happened to Netscape? That's a long story," Gates quipped today before press and analysts, expressing confidence his company will succeed with its e-commerce software.

"I have very little doubt about our ability to do that. That one is pretty much a slam-dunk for us," he said.

Microsoft's competitors in the e-commerce space have had "strange business models," he said of the larger scheme, adding that Microsoft has taken feedback from customers for the last 18 months in formulating its own plan.

Gates talked less about the portal and consumer sides of the business, saying Microsoft's acquisition of LinkExchange last year will serve as a powerful channel for delivering Microsoft technologies to small companies.

Matt Kursh, business unit manager for the Microsoft Sidewalk, enthused about Microsoft's progress on all fronts, from software to MSN to its online storefronts.

"We're making organizational changes to make sure it all works together," said Kursh, who came to Microsoft several years ago when it bought his company eShop, which was the code base for earlier versions of Microsoft's storefront software.

Kursh cited Microsoft's acquisition of CompareNet, with its directories of products in 95 categories, as an example of how the company is moving ahead of its portal competitors. "We have the technical infrastructure that's quite good, and they have the data," he said.

He also argued that rival portals--Yahoo, Excite, and AOL--will covet Microsoft's retail sites for travel and autos as well as its homegrown content for personal finance, entertainment, and real estate.

"All the other portals are asking, Where are the [profit] margins?" Kursh declared. "The advantage to us is that we are building the marketplace where buyers and sellers come together. They don't own the marketplace; they own the parking lot."

But portal competitors aren't standing still. Yahoo already has a healthy hosting business for Web storefronts and is positioned to expand that service once it buys GeoCities. Microsoft will have a similar offering sometime after June.

Lycos has an e-commerce initiative to link many Web stores to its network of sites even if its pending merger with USA Network falls through. Infoseek is unifying its e-commerce strategy with Disney and other sites in the Go Network.

The other top-tier portal, Excite, has signed many e-commerce sponsorships with major Net retailers. Its strategy may evolve once its acquisition by @Home, the high-speed cable Internet access service, is complete.

On the software side, Microsoft faces different rivals. IBM has made e-business its chief marketing focus and has captured a level of industry buzz. Big Blue offers software, services, and hosting to help companies do business online, with an emphasis on larger companies. Later this month it's slated to announce new versions of its Net.Commerce software.

One-time Microsoft partner Intel also is emerging as an e-commerce competitor. It recently bought iCat, which offers store-building tools for smaller companies. It also has a joint venture with enterprise software giant SAP, called Pandesic, to build and host e-commerce sites for companies that want to outsource those headaches. But Pandesic is committed to Microsoft's platform offerings.

Database giant Oracle also plays in the e-commerce space. Most of the major Internet stores run on Oracle databases, and the company has tried to leverage that with e-commerce tools and applications.

Another formidable competitor is Open Market which offers software for Web hosting services such as portals, telephone companies, and ISPs plus tools for merchants to build storefronts. Lycos will run its Web marketplace on Open Market software, and it has a broadband play too--pay-per-view video network Intertainer, designed for cable and phone companies, will use Open Market software for interactive shopping.