Businesses Face A .NET Of Uncertainties

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September 05, 2000 (4:21 PM EDT)

By Stuart J. Johnston,

On Sept. 26, Microsoft will launch its most aggressive effort to meet the toughest needs of its business customers. That's the day the company plans to roll out new high-end server products designed to offer the power, stability, and scalability required by large-scale enterprise computing.

Microsoft (stock: MSFT) is also expected to highlight the first pieces of its .NET architecture, an ambitious multiyear effort to turn the Windows operating system and Windows applications into online services that can be rented on an as-needed basis or via subscription. Sounds great -- but will it fly?

The Windows 2000 OS will eventually morph into Windows.NET, a platform that will let users deal with applications and data as services. To accomplish that, Microsoft has focused all its future development on .NET, an all-encompassing vision that embraces virtually everything Microsoft is working on, from systems to applications to development tools to information services.

"The future of Windows in a .NET world is to be a service itself," said Steve Ballmer, CEO of Microsoft, Redmond, Wash. "Windows should update and manage itself. It should configure new devices for you. It should do everything for you. It's a service that always keeps your PC current, always takes care of you."

The concept isn't really new or unique. Application service providers have emerged in the past couple of years to try to develop a market for renting applications over the Internet. Microsoft itself had a similar initiative called Next Generation Windows Services, which is evolving into the .NET and Windows.NET effort.

The .NET initiative promises to completely remake Microsoft's business model and eventually lead the company away from selling systems and applications in favor of renting them, either for a fee, through some kind of usage-based charges, or a combination of both.

On the server side, however, Microsoft recently rolled out a new licensing program based on the number of processors used in a server. The company has said it will continue with that model.

But Microsoft's recent -- and almost exclusive -- focus on .NET has deeply confused some customers about the future of Windows 2000, according to analysts.

"They're making a mistake by talking so much about .NET," said John Enck, research director at Gartner Group Inc., Stamford, Conn. "Some of my clients are saying, 'Maybe I'll wait this out. I don't want to go to Windows 2000 and then have to redo it in a year or two.'" The confusion has caused sales of Windows 2000 to slow as business customers hesitate, waiting for the .NET shoe to drop, he said.

That won't happen soon. In every .NET presentation so far, Ballmer has emphasized that .NET won't become a reality until 2002 or later.

For many technology managers, that means .NET is something they don't have to worry about for some time. Right now, many are still wondering whether to go to Windows 2000 or wait. ".NET looks like an interesting idea, but I don't really understand it yet," said Ric Liang, a technology architect at Westcoast Energy Inc., Vancouver, British Columbia, a natural-gas transmission company. "We still haven't done the Windows 2000 move because we haven't found the business case for it yet." For now, the company will stick with its Windows NT 4.0 servers.

Richard Entrup, IS director at Wilson, Elser, Moskowitz, Edelman & Dicker, New York, a law firm with 21 offices in the U.S. and Europe, said his staff just wrapped up its NT 4.0 deployment late last year and isn't in a hurry for new versions. "We're still settling our NT 4.0 environment," he said. "We hope to start looking at Windows 2000 this fall." But Entrup said the firm hasn't even begun to think about .NET: "Law firms don't upgrade every year."

Even IT departments that have decided to move ahead with Windows 2000 deployments are still uncertain about .NET, supporting the view that IT managers concentrate on what they can realistically deploy in the next six months rather than products and services that might be available in several years. "As far as .NET is concerned, we haven't gotten far enough into it to really know if we're interested because we haven't had the time," said Howard Jones, CIO at Snapper Inc., McDonough, Ga., a manufacturer of high-end power mowers and lawn tractors.

The .NET vision does have its advocates. "In terms of overall architecture, you get a tremendous boost in the productivity as a developer using .NET," said Richard Feather, site-development manager for Interlink Group, Denver, a network infrastructure and software development firm.

What can Microsoft's business customers expect to see between now and .NET? Microsoft has a host of new products designed to reinforce the company's claim that it can supply the high-powered, super-reliable business systems needed to handle the e-commerce, data warehouse, supply chain, and customer relationship management systems required by many companies.

It all starts with Windows 2000. Microsoft recently said it has shipped more than three million copies of the OS in the first three months of availability. In midsummer, the company shipped Service Pack 1, the first maintenance release, which fixes a variety of mostly minor bugs in the original Windows 2000 code release.

Now, Microsoft is about to ship its highest-end server platform ever -- Windows 2000 Datacenter Server. It is Microsoft's first serious attempt at high-end computing, with the ability to run on servers with eight to 32 microprocessors. Datacenter Server also supports an Intel-designed 36-bit addressing scheme that lets the system directly use up to 64 Gbytes of main memory.

Also on Sept. 26, Microsoft plans to ship Exchange Server 2000 and SQL Server 2000. In addition, it will showcase other members of the 2000 server line, including BizTalk Server, which recently entered general testing, Application Center Server, Host Integration Server, Commerce Server, and Internet Security and Acceleration Server.

Next month, Microsoft will begin testing the next major release of Windows, code-named Whistler. Near the end of this year or early next year -- and nearly simultaneous with the delivery of Intel's Itanium IA-64 processor -- Microsoft plans to ship a 64-bit version of Windows 2000 designed to take full advantage of that chip's capabilities. A couple of years later will come another major release of the OS, code-named Blackcomb.

While some of the preliminary pieces of .NET are appearing in development tools, such as preview versions of the next release of Visual Studio, much of the .NET functionality that the company envisions will have to wait for the Whistler and Blackcomb releases of Windows.

From a practical standpoint, Whistler's main claim to fame has nothing to do with .NET. Whistler will be the version of Windows 2000 that finally replaces the Windows 98 code base in the desktop version of Windows. That may come as a relief for many IT departments that have to administer a mix of desktops ranging from Windows 95 and 98 to NT 4.0 and Windows 2000 Professional. Reducing the mix to one OS should ease demands on support staff and pressure on IT budgets.

The Whistler beta test will also include a 64-bit version designed to run on Intel's IA-64 architecture. In addition, a .NET "Framework," which will include a universal run-time engine and common-class libraries, will come bundled with the OS, according to analysts and industry sources. "Whistler is the release that has the .NET run-time packaged with the operating system," said Will Zachmann, a VP at Meta Group, Stamford, Conn.

The run-time and class libraries are the third evolution of Microsoft's Component Object Model technologies and are built on top of functions already available in the second iteration of COM, called COM+. They include transaction process monitoring and automatic message queuing. COM+ shipped with Windows 2000. The .NET Framework could be finished before Whistler is ready. If so, Microsoft may make it available independent of Whistler, perhaps as a set of files that developers can ship with their applications.

Whistler may also add some of the new user-interface features that the company has promised in Windows.NET, including a simplified look. Whistler may include intelligent agent technologies similar to those in the help agent in Office. Also, Microsoft's first software-as-service offering -- an identification and authentication service based on its current Passport technology -- will be supported in Whistler, according to officials and company documents. Other innovative features, such as natural-language processing, are more likely to show up in Blackcomb, not Whistler, according to Jim Ewel, Microsoft's VP of server products.

Some analysts, including Meta Group's Zachmann, theorize that .NET will ultimately swallow up the OS altogether. "Eventually, the COM+ components become .NET components, and more and more of the OS will be implemented as .NET instead of as a traditional operating system," he said.

It is clear that Microsoft is counting on basic features in Windows 2000 to provide the underpinnings for .NET. But company executives hesitate to say which operating-system features will be used to provide which capabilities. While Microsoft officials are always cautious about discussing future products, in this case, the lack of clarity may be attributed more to a vision that's not developed than to a veil of secrecy.

Analysts say several features already available in Windows 2000, including activedirectory, IntelliMirror, and COM+ technologies, will obviously provide some of the technology underlying .NET. For example, Windows 2000's Active Directory will no doubt provide location information needed to build .NET services. Two other software-enabled capabilities that Microsoft plans to offer as services -- storage and notification -- will rely on functions in Exchange 2000, SQL Server 2000, and Windows 2000. The storage service for users' files, programs, and information will take advantage of Windows 2000's Active Directory and SQL Server 2000's data-storage capabilities. The Microsoft notification service will offer messaging and other capabilities, some of which will be provided by Exchange 2000.

Microsoft says its forthcoming .NET storage service will make user files and applications available -- when appropriate -- "anytime, anywhere, on any device," including on Web phones and personal digital assistants. Those capabilities are likely to take advantage of Windows 2000's IntelliMirror technology, which was originally designed to make users' files and applications available on any computer they logged on to, several analysts said. "Clearly, Microsoft is doing its best to leverage the technology in Windows 2000" to support .NET, Gartner Group's Enck said.

Microsoft is also close to shipping other server products that will play an important part in .NET's future: Acceleration Server 2000, Application Center 2000, BizTalk Server 2000, Commerce Server 2000, Host Integration Server 2000, and Internet Security. Eventually, Microsoft plans to market its Office productivity applications suite as a service it will call Office.NET.

All of these services and applications depend on one key non-Microsoft technology: the Extensible Markup Language, a burgeoning industrywide standard for data and program interaction over the Web. To that end, Microsoft has already included an XML language parser in Windows 2000, and it continues to release updates to that technology. Over time, all of Microsoft's products will become XML-enabled, giving them a universal means of communicating, not only among themselves but with other applications over the Internet.

XML "actually becomes the basis for doing better enterprise application integration than is possible today," said Ballmer.

The goal is to create Web-based application services that can be easily assembled using the software equivalent of Lego blocks, with each block a service that can simply be coupled. "I happen to think that this is one of the great opportunities to push the tools, not to just be better, but to almost automatically let you build applications and just click to deploy," Ballmer said. "So you essentially integrate Web hosting directly with the development tools."

The next year will tell the tale for Windows 2000 in all of its various versions. When Windows 2000 shipped in March, business customers were still reeling from the investments they had made last year to fix year 2000 problems. In addition, most IT departments conduct extensive tests on new systems before deploying them.

Many wait for one or more service packs, or bug fixes, to emerge before getting serious about massive rollouts. If customers aren't too put off by Microsoft's .NET focus, Windows 2000 rollouts should be picking up steam right about now.

Datacenter Server faces a similar acceptance challenge. With the delivery of Datacenter Server this month, six of Microsoft's biggest server-hardware partners -- Compaq (stock: CPQ), Dell (stock: DELL), Hewlett-Packard (stock: HP), IBM (stock: IBM), Stratus, and Unisys (stock: UIS) -- will announce systems certified to run it, along with consulting, training, and support programs meant to provide a minimum of 99.9 percent uptime. But Datacenter Server is three months late and had a short testing cycle, so it will likely take customers six months to a year before they're certain it is as stable, powerful, and scalable as Microsoft claims.

With the introduction of Datacenter Server, Microsoft edges closer to challenging Sun's and IBM's dominance in the data center. Other key products, such as SQL Server 2000 and Exchange Server 2000, should aid Microsoft's move in that direction.

High performance at low cost is Microsoft's main selling point, and the new server products should help make the case. For example, Microsoft this summer posted on the Transaction Processing Performance Council's website results that showed the SQL Server 2000 database performing 262,000 transactions per minute running on Windows 2000 Advanced Server. That performance came at a cost of a little more than $20 per transaction, surpassing Sun Microsystems (stock: SUNW) in database speed at a lower cost.

Microsoft was beaten only by IBM's DB2 database, which posted 440,000 transactions per minute at a cost of $32 per transaction. But IBM's numbers were achieved by running DB2 on top of Windows 2000 Advanced Server. And the Microsoft and IBM benchmarks were achieved using the Microsoft Transaction Services in Windows 2000's COM+.

Some IT managers are excited by the prospect that they can replace more expensive servers with commodity Intel (stock: INTC) servers running a version of Windows 2000. "Everybody wants to save money, and you also can save on support costs because you can support Datacenter Server with people you already have," said Robin Hensley, director of data center programs for Compaq.

Snapper's Jones can envision replacing his company's AS/400 with an Intel-based server running Datacenter Server. That's still in the future, because the company's enterprise resource planning vendor, JBA, a division of Geac Computer Corp., Toronto, hasn't ported its software to the Microsoft platform. "If Datacenter has the speed, for what I'm spending on the AS/400, I'd do it in a heartbeat," Jones said.

Quality Care Solutions Inc., Phoenix, has been testing Datacenter Server with its Qmacs software for health-care payer and provider organizations. The early results are impressive, said Bruss Bowman, a founder and VP of engineering at the company. "We pushed a Compaq 32-way server to about 40 percent to 55 percent capacity, and the sustained numbers that we've seen were incredible," Bowman said. "We established numbers that would meet the needs of all but about 10 of the players in the high end of our market."

However, the move to 64-bit Windows may still be a ways off. "We don't necessarily see 64-bit systems taking off with a bang and suddenly becoming mainstream," said Microsoft's Ewel. As Itanium-based systems are released and processing-intensive applications such CRM are ported to run on 64-bit Windows 2000, though, some vendors and analysts see a gradual transition to a completely 64-bit world. By then, of course, the push could be on for a transition to 128-bit chips.