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Microsoft bids more on development tools

Microsoft is banking on a renewed focus on software development tools to drive sales of Windows and server software, the first fruits of a recent company-wide reorganization.

DALLAS--Microsoft is banking on a renewed focus on software development tools to drive sales of its Windows operating systems and server software, the first fruits of a recent company-wide reorganization, a senior executive said today.

Paul Maritz, a Microsoft vice president in charge of the company's developer tools division, told attendees of Microsoft's Tech Ed developer's conference here this morning that the company is increasing investment "significantly" in development tools, platforms, and database technology in order to deliver tools for building "third-generation" Web applications for business-to-business commerce and other uses.

Microsoft clearly sees Extensible Markup Language (XML) as a key technology for both business-to-business e-commerce and application integration. The company today announced new XML-based frameworks and a steering committee dedicated to its BizTalk server, XML-based server announced in March which enables businesses to integrate e-commerce applications and share data.

"It's hard to overestimate the importance of the XML standard," said Maritz. "XML will be the next key protocol for the Web; the lingua franca of e-commerce."

Maritz did not disclose how much the company plans to increase its investment in tools marketing and development. However, Tod Nielsen a vice president in the developer tools division, said that Microsoft plans to add additional personnel to its more than 2,000 marketing, training, and developer relations employees in the division. The company will also increase the amount of money its spends each year to host developer relations events and support materials, including distribution of software. Microsoft currently spends more than $200 million on developer relations, said Nielsen.

Maritz said Microsoft is focusing its tools effort on third-generation Web applications, which he defined as the next wave of software able to serve both PC and handheld devices, a variety of programming models, and more transaction-intensive e-commerce systems.

Development tool investments traditionally have not yielded the high-margin profits of other business software for Microsoft, or for other large software producers including Oracle and IBM. However, Nielsen, who heads marketing efforts for Microsoft's developer group, said Microsoft is pouring money into the tools area to spur interest and use of the company's Windows and Back Office software.

"The revenue we get [from tools] is important, but the most important objective is a strategic objective to encourage [developers] to build on our platform," said Nielsen. "We don't expect huge revenue growth from tools. The strategic value is more important than the revenue itself."

Maritz, who took the helm of the developer group as part of a company-wide reorganization announced in March, also detailed new products for better integrating Microsoft's various Windows operating systems with mainframe and Unix-based systems.

Microsoft plans to launch later this year an integration server code-named Babylon that will expand connectivity to mainframe systems, such as IBM's CICS transaction processing software, and to databases and other software. One important element of Babylon is that it will enable bidirectional movement of data between Windows applications and third-party systems. Microsoft currently sells SNA Server connectivity software to legacy systems, but it is much more limited than Babylon.

Overall, Maritz planted Microsoft's flag squarely in the Enterprise Application Integration market, which most of its competitors are also eyeing. Oracle and IBM have already stepped-up development of EAI systems, which are used to link legacy systems, client/server, and Web-based applications, as well as popular enterprise resource planning (ERP) and database applications. The technology has become increasingly important as businesses couple back-end business systems with new Web-based e-commerce applications.

Maritz also sketched the company's 5-year plan for developer tools. Microsoft is planning tools to take advantage of new bandwidth technologies, and alternative software delivery models, such as application hosting and renting. "We're rethinking software as more of a service oriented model than a packaged product," Maritz said, referring to improvements in Internet bandwidth. "When you can assume connectivity as a given, the whole user experience changes," said Maritz.

In related news, Microsoft said it has established a benchmark with National Software Testing Laboratories (NSTL) to demonstrate development of scalable applications based on Windows NT and various Microsoft technologies. The company plans to use the benchmark results as a proof-point to counter perceptions that Windows NT lacks the scalability of Unix and other operating systems. Scalability generally refers to the operating systems' ability to support additional users without failure.

The company also distributed beta versions of its forthcoming Windows 2000 operating system, and announced establishment of a vendor initiative to extend Microsoft's OLE DB data access interfaces to integrate data mining tools and applications.