MS, Oracle think vertical

As Windows NT-based server software becomes a more significant and profitable piece of the revenue picture for software vendors, both Microsoft and Oracle plan a deluge of server software bundles designed to cash in on the trend.

Mike Ricciuti Staff writer, CNET News
Mike Ricciuti joined CNET in 1996. He is now CNET News' Boston-based executive editor and east coast bureau chief, serving as department editor for business technology and software covered by CNET News, Reviews, and Download.com. E-mail Mike.
Mike Ricciuti
3 min read
As Windows NT-based server software becomes a more significant and profitable piece of the revenue picture for software vendors, both Microsoft (MSFT) and Oracle (ORCL) are planning a deluge of server software bundles for delivery next year designed to cash in on the trend, CNET has learned.

Microsoft is planning to drastically expand its BackOffice family to include a series of software bundles more finely tuned to specific markets, according to product managers at the company.

Microsoft plans to combine products that are now part of BackOffice--a shrink-wrapped bundle consisting of the Windows NT operating system, Internet Information Server Web server, SQL Server database, Exchange messaging server, SNA Server host connectivity software, Systems Management Server, Index Server, and Proxy Server--into new bundles aimed at vertical industries that will probably include telecommunications, health care, insurance, and banking. These areas are already the targets of the company's Industry Solutions program, which teams Microsoft software with system integrators specializing in vertical markets.

Dan Basica, a SQL Server product manager, said other logical bundles might be aimed at specific tasks, such as electronic commerce or communications. A likely bundle might include Windows NT, Exchange, Internet Information Server, Merchant Server, and SNA Server.

Microsoft recently introduced a new BackOffice bundle called the Commercial Internet System aimed at Internet service providers. Company officials say that's only the tip of the iceberg. "We've done a good job of packaging BackOffice for IS users, but there are other potential targets. We're planning to better target individual customers," said Craig Fiebig, a BackOffice product manager.

Microsoft doesn't want to commit to any specifics yet, but sources familiar with the plan said the new bundling is in the advanced planning stages and could be officially announced early next year.

Oracle has almost exactly the same idea. It recently scrapped plans for a BackOffice competitor, code-named Bandwagon, but is now hoping to salvage some of that work by introducing more specifically tailored packages for electronic commerce, data warehousing, and groupware, according to a representative.

Bandwagon was to have included Oracle's database server, its Workgroup Manager administration and software distribution tool, the Oracle Office messaging server, the Oracle Web Server, and a series of host connectivity gateways.

"Oracle's generic bundle [Bandwagon] was not a solution for users' problems. Customers are looking for more specific line-of-business solutions," an Oracle representative said. The company has not announced specific plans or ship dates. Sources said the company may follow Microsoft's lead by announcing new server software bundles on Windows NT early next year.

Microsoft's Fiebig said an important reason for launching vertical versions of BackOffice is the company's decision to expand BackOffice from its original svelte 5-product configuration, to a more portly 18-plus product lineup. The length of the product list that may limit the bundle's appeal to small businesses or to other potential buyers who don't need all of the products.

Microsoft is also attempting to capitalize on Windows NT's rising popularity among corporate users by making BackOffice appeal to as wide an audience as possible.

Server software continues to grow into a significant share of the company's revenues. SQL Server sales alone grew 100 percent this year and are expected to generate nearly $300 million in revenue in 1996. Industry analysts say that BackOffice server products could one day account for the bulk of the company's software profits.

Oracle has also profited from the NT boom. Sales of its NT-based database servers have increased dramatically, and the company controls roughly a quarter of the market for NT database software, according to market research firm International Data Corporation. Microsoft controls 57 percent of the market, according to IDC estimates.