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Microsoft bets on the Net
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June 22, 2000: 2:21 p.m. ET
Shifts from PC to Web services; past rival Andreessen teams with Gates
By Staff Writer Michele Masterson
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REDMOND, Wash. (CNNfn) - Microsoft Corp. unveiled its new Internet services initiative on Thursday, a move which company officials described as a make-or-break strategy aimed at transforming Microsoft from a PC-focused company to an Internet-centric firm.
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Bill Gates spoke with CNNfn's Willow Bay on Microsoft's new Internet push.
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The initiative, called Microsoft.NET is geared toward harnessing the power of the Internet and marrying it to services available to users anywhere, at anytime, and from any type of device, including wireless phones, PDAs, TVs, home networks and desktop computers. Over the course of the next two years, various services will be rolled out.
"You could say this is a bet-the-company kind of thing," Gates told an audience at the Forum 2000 conference. "Our entire strategy is being built around this." (445K WAV 445K AIFF)
The development comes at a time when the company is embroiled in a long-running antitrust case with the government in which a federal judge ruled that the company used anticompetitive tactics, exploiting its monopoly over PC operating systems to impede the development of competing software.
Industry analysts say the Microsoft.NET strategy would likely bring the company's divisions closer together, making it even harder for the government to split the software maker into two pieces. Earlier Thursday, the Justice Department and Microsoft agreed to speed up their antitrust battle in a move that could allow the Supreme Court to decide by September whether to hear the case directly or send it to a federal appeals court.
 The Microsoft.NET strategy uses the Internet as a platform, rather than a PC, and will allow users and developers to view and gather information from various sources, such as e-mail, Web sites, and spreadsheets. Using Extensible Markup Language (XML), a programming language that allows the exchange of data, users and developers will be able to pull that information together in one place.
"There is information out in the Internet, out in the cloud, that could be working on your behalf," Gates said. ".NET as a platform for next generation Internet integrates privacy, security and puts information where you want it. The user experience will become a lot richer and put the user back in control."
Microsoft also said it is developing new products built on the .NET platform, such as updated versions of its Windows operating system, Windows DNA servers, Microsoft Office, the MSN Web network and Visual Studio, its system for Web developers.
.NET platform
Gates discussed the current Web climate as the browsing era, where he saw such positives as global connectivity, simplicity and mainstreaming. However, he also cited some drawbacks, including "read-only" information, lack of user control, keyboard-only usage and "islands" of unrelated devices, such as pocket PCs and desktop computers, where information is stored, but not necessarily shared.
To move beyond the browsing stage, Gates said a platform is needed to personalize information from multiple sites, extracting information that can be integrated across several devices.
XML as a protocol will be able to support a natural interface for users, meaning that not only text would be available, but also handwriting and speech recognition, Gates said.
"XML facilitates a new world of experience and services," said Gates. "XML transforms productivity tools and databases and brings even more profound changes than HTML (the Internet's hypertext markup language) brought."
 Also supporting the .NET platform are .NET's infrastructure and tools, including Visual Studio 7.0, and the new BizTalk Orchestration tool, both of which will use the XML-enabled line of Windows 2000 servers.
Gates also discussed .NET building blocks that will enable information to be distributed from offline to corporate servers or across the Internet.
These building blocks include user identity authentication, notification messaging, personalization, XML storage and calendaring functions.
As part of the new user experience described by Gates, users will become more communications-centric, through widespread access of information and the use of an agent that creates data based on user input and channels a user's preferences. For example, if a user always goes to the restaurant site Café MSFT, the agent will note that and in the future, offer it as a choice when the user wants to find restaurant listings.
Meet the Jetsons
Among the various demonstrations of how the .NET platform will work, the natural interface elements seemed as though they could have been lifted from the Jetsons cartoon series.
One feature, smart tags, shows users highlighted text of an important word or phrase, such as a company name mentioned in an e-mail. Clicking on a menu box, the user can then select options to go to that company's Web site, be shown a spreadsheet that analyzes its sales data, or provide investor reports on the company.
The second feature, type-in lines, provides both speech and handwriting recognition. In a window on the top of the .NET screen, similar to a URL or Web address window, users can type in a question or command, with the computer responding to it, either via voice or text.
In the demonstration, the user typed that he wanted to make an appointment with John Doe. The computer responded by vocally asking him, when, then asked how long the meeting should be, what date, etc. The computer then said it was checking John Doe's calendar. Finally, the computer confirmed a meeting was scheduled on both the user and John Doe's calendar.
Ballmer sees revenue opportunity
In a Thursday afternoon presentation, Steve Ballmer, Microsoft's president and chief executive officer, spoke about what he sees as several opportunities that .NET will offer for developers and companies.
"By creating a unified platform through which devices and services cooperate with each other, Microsoft will unleash a new wave of developer opportunity and creativity...A shift of this magnitude has huge revenue potential."
In an interview on CNNfn's Moneyline News Hour Thursday, Gates said some products based on the .NET platform should start hitting the market this year. He added, however that in terms of significant financial impact, "you'd have to look out three years into the future."
Several companies have already signed up to work with Microsoft on its initiatives, offering their technologies, services and products to be bundled into the .NET platform.
Among the firms: Compaq (CPQ: Research, Estimates), CMGI (CMGI: Research, Estimates), Dell Computer (DELL: Research, Estimates), Alibre, Andersen Consulting, Commerce One (CMRC: Research, Estimates), Quest Software, Verio, Sony (SNE: Research, Estimates) and Ariba (ARBA: Research, Estimates).
Microsoft is by no means working in a vacuum, with several of tech's heavy hitters already out in dot-com services land. Oracle (ORCL: Research, Estimates) has already invested heavily in Web-based services for corporations and Sun Microsystems (SUNW: Research, Estimates) is slated to unveil a Web-based office software suite by the end of the summer.
Andreessen teams with Gates
The Internet, as well as politics, can sometimes make for strange bedfellows.
Consider that Marc Andreessen, a co-founder of Netscape Communications, now owned by America Online (AOL: Research, Estimates), which is in the process of merging with Time Warner (TWX: Research, Estimates), parent of CNNfn, announced Thursday that his start-up, LoudCloud Inc., will do business with Microsoft, supporting its .NET initiative.
Netscape was at the center of the antitrust trial against Microsoft, with the government proving its case that Microsoft effectively muscled Netscape's Web browser out of the market in favor of the Microsoft Explorer browser, through various tactics. Given their rivalry, Andreessen has been extremely critical of Gates in the past.
In an interview with CNNfn.com, Andreessen downplayed the former rivals' past history.
"This is the story of two radically different businesses," Andreessen said. "Netscape and LoudCloud are very different and from a business standpoint, have a different relationship with Microsoft."
The nine-month-old LoudCloud, which is privately-held, develops and manages "Smart Cloud" services for high-growth Internet businesses, by offering software, hardware and Web operations infrastructure, to support high usage sites. The Sunnyvale, Calif.-based company has raised money through Benchmark Capital and Morgan Stanley Dean Witter.
Andreessen would not comment on Microsoft's antitrust case and also said the company has no plans to go public just yet, but will continue to work with a variety of high-profile tech names.
"We're technically agnostic," Andreessen said. "Our services support Sun and Oracle, but a lot of customers have been asking that we support Microsoft as well."
Andreessen doesn't expect his latest partnership will impact LoudCloud's relationships with Sun and Oracle.
"It actually complements Sun and Oracle. Some of our customers want to use our services on Sun, Oracle and Microsoft at the same time," he said.
He also doesn't think Microsoft's arrival on the Internet services playing field is too late.
"There is a broad-based transition going on throughout the next five to ten years in the software industry," Andreessen said. "This shift, to run on the Internet, is only just beginning. There is a huge unfulfilled demand right now." 
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