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Microsoft to buyers: Open your wallets

At its TechEd conference, the software giant will try to convince businesses to revive spending on technology as it readies new server products.

DALLAS--Microsoft is trying to convince businesses to spend more money on server software, as the company readies product releases for later this year.

The software giant announced at its company-sponsored TechEd conference in Dallas that two key products will enter customer testing. The products--a long-anticipated update to Microsoft's SQL Server database, code-named Yukon, and the latest release of the company's BizTalk Server business integration software--are set to begin testing this month.

Despite this, customers will have to wait a bit longer than expected to get the final version of Yukon. Microsoft on Monday said the software, initially slated for the first half of next year, will not ship until the second half of 2004.

In other server product introductions, Microsoft announced that it is nearly finished developing a new version of its Exchange Server 2003 messaging system. It also unveiled an update to its Windows Server 2003 operating system, which is tuned specifically for storage devices.

The announcements come amid Microsoft's push to revamp its server software line. The company said on Monday that it will spend more than $1.7 billion in the next fiscal year on server software research and development. It recently launched a branding effort intended to emphasize the interconnected nature of the company's server software products.

In a keynote address on Monday, Paul Flessner, senior vice president for Microsoft's server platform division, fine-tuned the company's message for its Windows Server System branding campaign, which the company adopted in favor of its confusing .Net Server-naming scheme.

Overall, Microsoft is attempting to convince businesses, which have curtailed spending on information technology in recent years, to once again look to software to provide a strategic advantage.

Spreading the message
Microsoft executives want to communicate that message to the "rank and file" business developers attending the conference, according to Barry Goffe, group product manager at Microsoft's server platform division. The software maker is banking on internal developers who can often help convince top executives to buy a particular product in order to spread the company's message.

Microsoft said it plans to devote $450 million in the coming year to support training and development efforts targeted at business developers.

It is also attempting to counter arguments--made by competitors such as IBM and Sun Microsystems--that businesses should outsource computing operations and pay monthly fees for services in an arrangement typically called "utility" or "on-demand" computing. Microsoft argues that it will improve its server software in order to take out the complexity that hinders technology executives from tackling more intricate projects.

"A lot of this discussion about utility computing has been very much built around financial arguments and (asking), 'What is the value of IT?'" said Goffe. "Our belief is that IT does matter, and IT does have the capability to be a strategic asset."

Although Microsoft has made significant strides in making its software more reliable, the company is still struggling to gain the confidence of many businesses that question the reliability of Microsoft's server software, said Ted Schadler, an analyst at Forrester Research. For businesses, server software buying decisions typically involve choosing either Microsoft's products or Java-based software from IBM and other companies.

"They've earned the right to play in the data center, but they're still struggling to find the sweet spot for (Microsoft's message)," said Schadler. "They haven't figured out how to position Windows against other enterprise platforms like J2EE (Sun's Java 2 Enterprise Edition)."

In product-related news, Microsoft announced that the revamped BizTalk software will introduce a workflow server based on the Web services for Business Process Execution Language (BPEL) specification. It also incorporated support for the

Microsoft has said that the BizTalk upgrade will form the cornerstone of its long-term server software bundling strategy, called Jupiter. The company said that by 2005 the security, administration and development tools used in BizTalk will be built into Microsoft's Content Management Server, for storing and presenting documents, and also into the company's Commerce Server software for e-commerce Web sites.

Analysts said that Microsoft's plan to bundle together its server software applications will raise the competitive pressure in the integration software arena, particularly integration specialists. The combined bundle of Microsoft's server applications is due for release in the first half of next year.

In the messaging arena, Microsoft on Monday will make a final testing version of Exchange Server 2003 and announce two separate editions of the messaging server software. Customers can deploy Release Candidate 1 of Exchange Server 2003, which is available Monday, as a stepping stone toward the final release, which is due this summer.

In storage, Microsoft will introduce Windows Storage Server 2003, a version of its latest server operating system, designed for storage systems, which the company said is now being sent to manufacturing. There will be several editions of the operating system for use in devices ranging from 160 gigabytes to about 80 terabytes, according to Microsoft executives. The updated operating system will allow companies to improve performance, particularly for sharing files with Unix and Linux systems, executives said.

The Yukon release of SQL Server will allow companies to more easily manipulate data stored as XML documents and let developers write applications in Microsoft's Visual Studio .Net tool that can run within the database. The database will also introduce a new file system add-on that's designed to make it easier to find information across corporate networks.

Yukon will also include reporting services, initially announced in February, intended to make it easier for developers to create reports based on database queries.