Antitrust lawsuit aside, Microsoft has its work cut out for it in the enterprise, say top industry analysts. If the Redmond giant wants to conquer the enterprise as it has the desktop, it has more than a few battles to fight. From the potential pitfalls of .NET to a preponderance of security loopholes, the company is vulnerable. And Microsoft’s competitors are poised to exploit its weaknesses. Here’s a look at what the analysts are saying.
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Microsoft lacks focus
Betsy Burton, Gartner analyst
In enterprise solutions, Gartner believes that Microsoft’s greatest vulnerability is its own irresolute commitment to executing on a cohesive strategy. At its root, this vulnerability has more to do with Microsoft’s culture than with its products or ability to compete with leading enterprise solution providers (for example, Oracle, IBM, Sun Microsystems, and SAP).
On one hand, Microsoft has brought into its development fold some industry heavyweights, with expertise in delivering enterprise-class infrastructure, database management systems (DBMSs), and operating systems. However, when Microsoft executives speak about future Microsoft technologies, the message is more focused on how its enterprise technologies (such as SQL Server and MTS) enable Microsoft’s traditional products to become more enterprise-worthy. This philosophy seems to indicate that from a Microsoft senior management position, Microsoft’s traditional workgroup application focus will continue to hold precedence over its enterprise-class solutions effort; Microsoft’s enterprise solutions are more a means to an end.
For example, .NET is an initiative for encouraging the development of Web services. But if Microsoft does not fully embrace a solid, visible application server strategy, .NET will be a technology without a strong foundation.
And if Microsoft subverts the SQL Server release (code-named Yukon) as the backbone for productivity applications, it is likely to derail its focus as a competitive enterprise DBMS provider. Although this would not degrade SQL Server’s market position, it would create steeper challenges to Microsoft’s gaining credibility in enterprise-class solutions.
While Gartner believes Microsoft’s enterprise focus will become derailed by its management’s short-term focus, the company will likely regain its enterprise systems focus by 2003—if not by management, then by the vision of development engineers.
Tyler McDaniel, director of application strategies, Hurwitz Group
With the .NET rollout, Microsoft has more fully squared up to meet the needs of enterprise-scale software. With its incumbent wealth in development tools, much improved scalability with the database, and a dominant OS, the Redmond giant is intent on trolling for a larger portion of the enterprise budget, but perhaps the mighty roar of .NET lacks some critical areas needed for a complete enterprise-class infrastructure stack.
If indeed the market takes up the banner of Web services and embraces .NET, it might well find itself back out on the market shopping for more robust integration tools. Microsoft has never had a thriving strategy for integration, and the addition of BizTalk Server in conjunction with Microsoft Message Queuing (MSMQ) and Host Integration Server won’t fully foot the bill for much of the enterprise need. There is a gap in Microsoft’s enterprise application integration offering that encompasses a fair amount of technology, from adapters to integration brokers. The company is relying on XML to smooth integration, but XML has yet to become the ubiquitous choice for enterprise data, making collaborative integration a still-challenging proposition. For customers looking for robust and proven integration tools, looking elsewhere might be the best option.
Also, with the trend toward larger-scale adoption of enterprise portals—the big kind that incorporate B2E, B2C, and B2B initiatives—Microsoft hasn’t shown a strong hand yet. SharePoint Portal Server is at best suited for group or departmental use. But then again, any version of Windows is the only “portal” an enterprise needs, or so we might deduce.
Elsewhere on the enterprise software supplier landscape, IBM, Oracle, iPlanet, and Sybase all show a pretty rich hand themselves for the development, deployment, database, business intelligence, integration, and portal products. For IBM in particular, having a strong service arm to build custom solutions doesn’t hurt when vying for account control. Microsoft can’t bode this kind of pull and will need lots of support from third-party service providers. Historically, this kind of relationship paradigm has been a tarnish on Microsoft’s market luster.
While Microsoft has a succinct and potent vision with .NET, the tactical product road map isn’t as shiny or as heady as the strategic message.
A fight of the servers
Tom Manter, research director, Aberdeen Group
In the short term, Microsoft will continue to be challenged by the increasing popularity of Linux-based servers being deployed on the “edge” of the Internet as caching and Network Attached Storage (NAS) appliances and as Web servers. This is especially true when you have major IT suppliers like Compaq, Dell, HP, and IBM making huge investments in building, supporting, promoting, and distributing these systems.
We should, however, expect some of Microsoft’s eroded presence in this market segment to be offset by a growing Microsoft presence in the large enterprise and back-end computing arena over the next two years. IT buyers already have greater choices outside of expensive UNIX and proprietary systems, and this trend will continue. Today Unisys offers a 32-way Windows-based server delivering mainframe capabilities; we will see this trend continue with the introduction this year and next year of greater scalable single Windows-based 64-bit servers capable of challenging those other systems.
In the long term, Microsoft is challenged to establish a lead position in the new and evolving Web services computing paradigm. As with each paradigm shift in the past, all companies—leaders and followers—start from “zero.” In this arena, three operating environments are poised to challenge for market dominance: the Linux open source community, Sun Microsystems, and of course, Microsoft.
A not-so-secure monopoly
Rob Enderle, research fellow, Giga Information Group
We have been monitoring three critical exposures that support the contention that Microsoft is increasingly vulnerable:
1. Security (Or the lack thereof): Increasingly, Microsoft products, particularly Exchange and IIS, are targeted successfully by hackers. The recent Code Red virus, which was elevated to a national threat, is representative of that risk. Companies are questioning the further deployment of Microsoft’s platforms and favoring those that appear to be more secure.
2. Monopoly: As a result of the adverse court decision, future products could be defined by the government, and Microsoft is far more vulnerable to adverse litigation than ever before. In addition, its ability to respond to a competitive threat is expected to be dramatically reduced by this process; other firms, most recently IBM, have historically been reduced to a shadow of their former selves as a result of adverse judgments or settlements in related actions.
3. Pricing: Recent pricing changes by Microsoft have resulted in the strongest backlash by customers we have ever seen. Currently, we are monitoring increased activity on Linux and Apache servers to displace IIS servers, which are seen as excessively vulnerable and excessively expensive. As this continues, even the up-till-now invulnerable Office franchise may be at risk as firms work to avoid what they collectively appear to view as a tax increase from Microsoft.
In the end, Sun, AOL, Corel, Apple, Adobe, IBM, and even Sybase may benefit from a set of circumstances that collectively make Microsoft products less attractive and the company more vulnerable.