How far will Windows open?

Despite its size and influence, Microsoft says it reacts rapidly to changes in competition, user demands, computing models and legal pressure. In the last year that claim has been put to the test, following a US court finding that the company had been guilty of monopolistic practices. It now faces the possibility of a breakup ­ although this scenario is looking less likely as the appeals process progresses and it has had to rebuild relationships with software and hardware partners. Microsoft has also started to develop Web-based services, where it faces a number of rivals.

For IT buyers, the indications are that Microsoft systems are opening up in some respects, by supporting more open standards, but there are signs that products are designed to offer a number of advantages to companies that use complete Microsoft packages, rather than mixing them with other applications.

Microsoft is appealing against the break-up order and a new optimism surrounds the firm, since many lawyers believe the order will be overturned. This, together with plans for new operating systems and the rollout of its dot-Net software-as-a-service strategy, and HailStorm messaging Web services, could result in a Microsoft that is as powerful and confident as ever.

Divided opinion
Dot-Net and HailStorm should give some indication of how far Microsoft has come in opening itself up to interoperability with rivals, and meeting the demands of users. In judging Microsoft's progress, however, its friends and foes are sharply divided.

Ed Black, president of Computer & Communications Industry Association (CCIA), with members including Sun Microsystems and America Online, said the HailStorm strategy could result in another antitrust case. 'Microsoft is going to leverage this and bundle things together. It's pretty blatant on its face,' Black said. 'This behaviour is a continuation of Microsoft's anticompetitive strategy.'

But some loyal Microsoft customers said the company is changing for the better and giving them what they need. For a long time Massimo Villinger, chief technology officer at Lockheed Martin Information Systems, pushed Microsoft to allow its software to interoperate with other platforms. But his pleas fell largely on deaf ears. Lockheed Martin runs Windows on more than 100,000 desktops and many of its servers and is one of Microsoft's oldest and most loyal corporate customers. It was one of the first firms to roll out Microsoft Exchange more than five years ago, and was an early adopter of the Windows 2000 platform, although its Web site runs Netscape-Enterprise on Solaris. As such, Villinger has the ear of the decision-makers at Microsoft, and it is possible they are listening. Changes over the past year have been enthusiastically welcomed by Villinger and other customers.

Villinger said, "As a multiplatform organisation, interoperability is critical for us, so it's gratifying to hear of Microsoft's readiness to abide by industry standards, embrace XML [eXtensible Markup Language], Soap [Simple Object Access Protocol] and participate in the standards bodies."

A number of Microsoft's partners say it is being forced to change the way it operates. They argue that customer demand and market forces are making the company embrace more open standards and access. Pat Gelsinger, chief technical officer of Intel's Architecture Group, said, "Customers need, and are demanding, cross-platform interoperability, and Microsoft is looking to build some horizontal standards based on Web-based standards."

Microsoft could lose custom if it does not adapt. Villinger said he will be "most disappointed" if Microsoft breaks its interoperability promises, as it did with Java. Lockheed would "not tolerate" such behaviour, as it would be "very negative for us and the entire industry to have different versions of XML", Villinger said.

But the CCIA's Black is sceptical about Microsoft's promises of interoperability. "What you have here are a lot of products and tools that are giving access to, and use of, the Web with a Microsoft-only flavour," he said. "Put these pieces together and throw in the new HailStorm stuff, and you have more Microsoft tools to force more people into a total homogeneous environment."

Others agreed. John Terris, a Microsoft developer and senior programmer at Kend-all Placement Group, said he foresees a repeat of what happened with Java. "Microsoft may release something for other platforms, but it won't work the same," Terris said. "If you're strictly a Microsoft department, it'll work great for you. But if you're a non-Microsoft department, it either won't be as stable or as fast."

Open standards

Microsoft denied this would happen. Brian Arbogast, vice president of Microsoft's personal services division, said there can be no lock-in because HailStorm is based on open standards such as XML and Soap. "The way these services will get ubiquitous usage is through open protocols and open access," he said. And Brian Valentine, senior vice president of Microsoft's Windows division, also said the company was committed to XML, Soap and other Internet protocols.

On other fronts, observers suggested that Microsoft has reduced the restrictions it imposes on its manufacturing partners and has accepted the inevitability of open standards and interoperability. Friend and foe alike said this is because it is being forced to by market conditions. Carl Ledbetter, chief technical officer at Novell, whose One Net strategy is competing head-on with Microsoft's dot-Net plan, argued that Microsoft is resisting change. "Its behaviour has changed, but only in a very small way. We now have multiple operating systems, and any browser will get you to the Web. Microsoft has realised this and is adapting its strategy accordingly," Ledbetter said.

Sam Patterson, chief executive of software component supplier Component-Source, a Microsoft partner, said Microsoft has become more flexible in the context of contract negotiations. "There's a lot more room for negotiation in the contracts we work out with them now," Patterson said.

Intel's Gelsinger said relations with Microsoft are better than at any time over the past decade, but areas of friction remain. "We support Linux, which is obviously a threat to Microsoft and a point of contention between our two companies," he said.

However, Ken Wasch, president of the Software and Information Industry Association (SIIA), a US IT trade group, argued that Microsoft's business practices have not changed at all. Microsoft's vehicle for exercising monopoly power remains its manufacturing partners, which are "no more free today than they were three years ago", Wasch said. The SIIA, which has 1,200 members including AOL, Apple and Novell, said that from a contractual basis, Microsoft has not liberalised its business practices to permit competing technologies. "From a technical basis, Microsoft continues to aggressively pursue the tying of products to one another, creating the inescapable conclusion among users that they ought to have its products from the back office to the browser, because if they don't, it will cause a significant deterioration in performance," Wasch said.

Sun and AOL have said they will lobby the Department of Justice and the attorney general to scrutinise Microsoft's business practices in the antitrust case under review. Legal experts do not expect it to be broken up. "The Court of Appeals could avoid some vexatious issues about market definitions and which facts to review by reversing and remanding the case to another District Court judge on remedy," said Stuart Gerson, an antitrust expert and head of law firm Epstein Becker & Green's PC national litigation practice in Washington. "Once there, a negotiated settlement is quite likely."

Allegations that dot-Net and HailStorm are being designed to tie users to Microsoft products could be presented to a District Court judge as further evidence of the need for a strong remedy against Microsoft if the case is remanded, legal experts said.

Some observers believe that by embedding Passport authentication technology into its core products and services, then launching products such as HailStorm on top of it, Microsoft is repeating the anticompetitive practices of the past.

Others noted that since the antitrust case began, Microsoft's dominance has not diminished. They argue that the power it wields in the operating system, Internet browser and office application markets has grown strongly. "I don't believe Microsoft has changed at all," said Michael Sherwood, IT director for the city of Oceanside in California. "Microsoft doesn't open up its operating systems or other technologies enough, then they invite other companies to come over and develop products on top of Microsoft technologies. Those other companies are always at a disadvantage."