Truth Time for Microsoft at PDC

Microsoft has been talking about Longhorn, the next generation of Windows, since its last Professional Developers Conference in 2003. At PDC 2005, to be held Tuesday through Friday in Los Angeles, it’s time to talk turkey.

“Microsoft has to give us a good idea of when this stuff really will be delivered,” said Directions on Microsoft analyst Michael Cherry. “The Windows Vista beta is not functionally complete. That’s a lot of work to get finished in a year.”

Microsoft has said it would deliver the Longhorn client, now known as Windows Vista, in 2006. Some features have been cut.

“They have to either convince us they won’t cut more features and still make that ship date, or ship late,” Cherry said. “But something’s gotta give.”

Microsoft must move forward with its Windows/Office strategy, as it tries to adjust to two competing trends: the Web as a platform and software-on-demand.

For at least three years, Microsoft has put a lot of eggs in Longhorn’s basket.

The client, now known as Windows Vista, will be “richer” than ever. It’s designed to act as the interface to Microsoft’s business collaboration tools, such as BizTalk Server and Visual Studio Team System, as well as to a variety of third-party applications.

Moreover, Windows Vista itself uses Web services as part of the Windows Communications Framework, formerly known as Indigo.

“Windows Communications Framework really is about making it easier for developers to build and use Web services and for clients to consume them,” said Cherry.

While Microsoft’s vision is of Windows Vista as the gateway to applications and Web services, there’s another software strategy that makes the browser the portal to applications.

There’s a growing number of software-on-demand vendors, including sales force automation and customer relationship management provider and RightNow Technologies , a supplier of hosted customer service, support and call center software.

Microsoft CEO Steve Ballmer showed he had his eye on in his speech at the recent Microsoft Business Summit, where the company gave details about Dynamics, formerly Project Green.

Promising to “give a very effective run for its money,” Ballmer said Microsoft would eventually offer both on-premise and hosted versions of its software.

“There will be a set of services that our mid-market customers … will be interested in using or running on a hosted basis on the Internet,” he said.
Microsoft already offers hosted e-mail via Exchange Services and anti-virus anti-spam through FrontBridge, and Ballmer left the door open for hosted CRM applications.

It’s started a company-wide initiative to deliver a hybrid of the on-demand model that connects full-featured Windows clients with additional information and functionality from free or subscription-based services.

“What Microsoft has signified is what the rest of the industry has been seeing, that hosted delivery of applications is the future of the software business,” said Greg Gianforte, CEO of RightNow. “The idea that you have to plug together all the hardware, wrestle with the operating system and deal with all the plumbing, adds cost complexity and risk to deployment.”

But the hosted software will be offered through channel partners, maintaining Microsoft’s current business model, said JupiterResearch analyst Joe Wilcox.

“In the here and now, Microsoft licenses a number of different products so they can be delivered on a hosted basis,” Wilcox said. “The plan is to do that for some of the accounting products. Microsoft could license CRM 3.0 to a third party for hosting, and that could be provided to a small business.” (Jupiter Research and are owned by the same corporation.)

Ballmer’s remarks seemed to support Wilcox’s view. In the same speech, Ballmer said that most enterprises need more customization and integration than can be accomplished either with’s software or what Microsoft offers on a hosted basis, leaving the door wide open for Microsoft ISVs.

“Microsoft isn’t in the business of competing with its channel partners,” Wilcox said.

At the PDC, Microsoft must convince developers that Windows Vista and the rest of the Longhorn wave of products will find market support, said Cherry.

“If you’re a developer today, and you have an idea for an application, one question you have to ask early on is how broad an audience do you want to have, and what is the best set of platforms and tools to reach that audience?” Cherry said. “If the newest technologies are only available on the latest version of the operating system, how fast will customers move to that new version?”

The other option, Cherry said, is writing a Web-based application that can be accessed by any operating system or browser. “It’s a very hard question to answer today,” he said.

But the biggest question that Microsoft will have to answer at PDC will be, “Why upgrade?”

Said Cherry, “The market won’t say, ‘Was it done on time?’ It will say, ‘Is the version I’m running today good enough? Is what they’ve created — regardless of when they ship it — worth my investing the cost to purchase it and the hassle to upgrade to it?’ And, if there aren’t enough compelling features, the ship date won’t matter.”

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