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Microsoft to unveil commerce strategy

Gates and Ballmer will appear together to describe the role of Windows 2000 in the future of online commerce.

In a key strategic initiative, Microsoft on Thursday will refresh its Internet commerce strategy, emphasizing the role of Windows 2000 and boosting e-commerce via its Microsoft Network online service.

To underscore the strategic nature of this week's announcement, both Microsoft Chairman Bill Gates and President Steve Ballmer are scheduled to appear at the San Francisco event.

"It's a huge bet on Windows 2000," said Don Swenson, executive vice president of sales and marketing at Saqqara Systems, which will announce that Hewlett Packard is using its catalog-search technology for an online commerce application that runs on Microsoft technology.

Microsoft has been tight-lipped prior to the event, saying only that Gates will outline the company's vision for the future of the digital marketplace and that the news will include both new technologies and initiatives.

"Microsoft's direction will be in addressing the customer problems in this space--the difficulty in building e-commerce applications and integrating e-commerce with existing business processes," said a source close to Microsoft who asked not to be identified. "Web sites are seen as expensive and inconvenient to build and maintain."

Among other elements, Microsoft is expected to describe how two 1998 acquisitions by its MSN and consumer division will fit into its online commerce strategy. MSN is expected to integrate the collaborative filtering technology from Firefly Network into its online marketplace. MSN also will use the contacts from its online ad network, LinkExchange, to reach out to small businesses on the Internet.

Microsoft also will address the issue of hosting storefronts for its shopping area on MSN, although it's not clear whether the company will do hosting itself or via a partner. However, the Firefly personalization capabilities are expected to be integrated with MSN's online marketplace, making it easier for small stores to make recommendations to visitors based on their other activities within the MSN mall.

MSN has lagged Yahoo and Lycos in providing ways for small merchants to set up shop on their services, and Microsoft hopes to catch up to rivals in that area.

"Our expectation is that a large component will be to combine existing properties into truly a Microsoft network," said David Baltaxe, an e-commerce analyst at Current Analysis who has not been briefed yet on Microsoft's plans.

eXtensible Markup Language [XML] will be a key part of Microsoft's announcements, seeking to address cross-platform interoperability. Microsoft has been in a co-development pact with Datachannel to create a Java version of XML. The goal: To "Webify" existing applications rather than rewriting them for the Net.

"DataChannel's XML Framework makes it easy for enterprise customers to integrate applications built on Microsoft BackOffice and the Windows DNA architecture with applications built on other platforms," James Utzschneider, director of evangelism in Microsoft's Application Developer Customer Unit, said in Datachannel's release today.

"Enterprise architects need to take a serious look at it," Utzschneider said. XML is seen as a way in particular to integrate legacy applications with Internet commerce sites for business-to-business sales.

The expected emphasis on Windows 2000 as part of the e-commerce strategy may mean that new versions of e-commerce software won't be released soon, since Microsoft's next-generation operating system isn't expected to ship until late next year.

David Truog, an analyst at Forrester Research believes Microsoft has not addressed two lingering problems in its January announcement of a "Complete Commerce" Web store hosting offering with 10 ISPs and hosting providers.

"My doubts remain about the scalability of Windows NT," Truog said today, although remaining circumspect about Microsoft's new announcements. Truog also questions whether hosting providers are the best focus for integrating e-commerce applications, which had been the thrust of January's announcement.