The software, code-named Indigo, is the next generation of Microsoft's .Net Web services product. The company is expected to disclose more details at its Professional Developer's Conference in Los Angeles in October.
While Microsoft executives have offered scant information on Indigo, people familiar with the company's plans said the software takes direct aim at IBM, Sun Microsystems, BEA Systems, Oracle and other rivals that sell products based on the Java 2 Enterprise Edition (J2EE) standard.
Microsoft has made inroads into large corporations with its back-end server software. However, J2EE-based systems are still generally favored by such customers for more complex computing jobs such as running stock exchanges or high-volume Web sites.
Indigo is tightly linked to Microsoft's Windows operating system and should update the company's .Net Framework tool for building applications. The tool is the "plumbing" for software that's needed to run Web services applications--which allow disparate systems to share data--on Windows operating systems.
Indigo could accelerate the development of Windows-based Web services, according to people familiar with Microsoft's plans. It would do this by allowing the operating system to handle much of the heavy lifting that's related to ensuring the security and management of applications in use, they said. Indigo is expected to incorporate the latest advances in Web services standards in security, reliability and transactions.
By making the development of Web services applications with Microsoft tools easier, the company hopes to drive demand for its forthcoming Longhorn releases of Windows and server software.
The Redmond, Wash.-based software maker has always sought to promote the sales of Windows-related products through its development tools and Indigo will likely continue that strategy, according to analysts.
But Longhorn, which Microsoft CEO Steve Ballmer called a "bet the company" release of Windows, has taken on even greater importance than previous updates to the operating system. Microsoft plans a "big bang" of associated product releases, including Longhorn versions of its Office package, its development tools and its server applications.
"Virtually everything we're doing from a product standpoint will accrue to the Longhorn wave," Ballmer said in a recent memo distributed to Microsoft employees.
Microsoft's Server Platforms group brought in $7.1 billion in revenue out of the company's total revenue of $32 billion in fiscal 2003. Server revenue climbed 16 percent over the same period last year. But to keep sales growing, Microsoft needs to convince businesses that new releases of Windows, coupled with better Web services infrastructure, offer a better bang for the buck than Java, analysts said.
"Microsoft sees the server business as a potential third pillar of the company to complement its Windows and Office businesses," said Greg DeMichillie, an analyst at research firm Directions on Microsoft. "And Web services is a way to start realizing the potential (of the server business)."
While Web services development has begun to catch on within big companies, Microsoft's overall .Net plan has been slow to take hold and has been bogged down by confusion that arises from marketing missteps. The company has even backed away from its .Net naming scheme, in which it attached the .Net name to many products that had little to do with its Web services plan.
With Indigo, Microsoft is hoping to drive adoption of Web services in businesses. This in turn could fuel sales of associated server applications such as its Biztalk integration software, SQL Server database and even its Exchange messaging server, DeMichillie said.
Indigo is expected to reach developers at about the same time as the launch of the Longhorn edition of Windows Server, according to a recent presentation given by Microsoft's senior vice president for servers and tools, Eric Rudder.
A software company executive familiar with Indigo identified one potential trouble spot. The software could diverge from industrywide Web services standards in order to optimize applications to run on Windows, he speculated. That would run counter to the idea of Web services as an open industry standard.
"Microsoft is saying, 'All this open standards with Web services has gone far enough,'" said the executive, who requested anonymity. "It's back to the movie as we know it."
Microsoft representatives declined to provide additional details about Indigo.
Agreement among the largest computing vendors over common standards would be a break with industry tradition. Microsoft has historically gone its own way in establishing standards that promote use of Windows. It has also been at odds over other industry standards initiatives that preceded Web services, such as the Common Object Request Broker Architecture (CORBA) specification.
By adhering to Web services standards, applications that are written with Microsoft's .Net tools can exchange data with non-Microsoft systems. The J2EE camp espouses both interoperability through Web services and the ability to run Java applications on server software from multiple providers.
The healthy adoption of its Visual Studio.Net development tool has led Microsoft to claim that the product has surpassed J2EE-based alternatives in usage. But whether customers will prefer Microsoft's Windows-centric Web services strategy or an operating system-neutral approach remains to be seen, said Ron Schmelzer, an analyst at research firm ZapThink.
"Will people value interoperability over code portability? We don't know. I don't think there's a long enough track record in Web services," Schmelzer said.
The main group to benefit from the advances in Indigo will likely be programmers that use Visual Studio.Net, Microsoft's flagship development tool for creating applications that adhere to Web services standards. A close coupling between Microsoft's .Net Web services capabilities and Windows will ultimately accelerate the creation of reliable Web services code, according to analysts.
"As the things required to build Web services are imposed on developers, it's a little bit daunting for most programmers to worry about security and management and process. Microsoft is trying to hide that complexity from developers," Schmelzer said.
Developers are a key constituency for Microsoft, which has for years successfully courted programmers and independent software providers. Applications that are built using Visual Studio.Net tools help generate sales of Windows and Microsoft applications.
Competition for the hearts of developers is heating up, however. BEA and IBM have made tools and developer relations top priorities in the fight to make their respective server software the preferred choice for deploying business applications.
One of Microsoft's techniques for shielding developers from the intricacies of low-level systems development is the notion of "managed code." With managed code, the underlying system--or run-time software--protects developers from introducing security vulnerabilities or other coding errors.
The .Net Framework introduces some of those built-in protections and time-saving capabilities.
Microsoft's long-term strategy with Longhorn server--which is expected as soon as 2005--is to have Windows provide managed code services, DeMichillie said. That will reduce some of the complexity of development and improve application performance, he said.
If Microsoft manages to solve the practical issues with Web services, .Net could get a significant boost as developers get access to the tools that are required to fulfill the company's long-term vision, said Mike Sax, president of Sax Software, which sells software components, or add-ons, for Microsoft's development tools.
"To me, the exciting part is, that dream of what could be done is actually being realized, and the roadblocks--very practical ones--are being removed by making it easier for developers and having the operating system take care of common problems," Sax said.