BUSINESSWEEK ONLINE : DECEMBER 11, 2000 ISSUE
BUSINESS WEEK E.BIZ -- COVER STORY Microsoft's Little Bro' Mark B. Hoffman remembers a time when Microsoft Corp. (MSFT) CEO Steven A. Ballmer barely gave him the time of day. Never mind that Hoffman's Commerce One Inc. (CMRC) was a partner of the software giant. When the companies first joined forces in 1996, Commerce One's software for running business-to-business e-commerce was a niche within a niche. Not anymore. The market for e-marketplace software is expected to grow from $428 million this year to $2.1 billion in 2003, according to Banc of America Securities. And Commerce One's fortunes have mushroomed along with the market. First Union Securities Inc. expects sales at the four-year-old upstart to hit $390 million this year and more than double in 2001, to $829.3 million. You'd better believe Ballmer chats with Hoffman now. ''For four years, I didn't talk to Ballmer,'' Hoffman says. ''In the last six months, I've talked to him pretty often.'' The reason? As mighty as it is, Microsoft needs Commerce One. It can't be the king of software unless it replicates it's dominance of the PC world on the Web. So far, on the Net, Windows remains an also-ran to various flavors of the Unix operating system, such as Sun Microsystems Inc.'s (SUNW) Solaris. Most of the hot young e-commerce software companies sell more applications for Unix than for Windows. Some bypass Microsoft altogether. Not Commerce One. Its software runs exclusively on Windows, making it a poster child for Microsoft's e-commerce efforts. But even Commerce One is hedging its bets. In response to requests from customers, it plans a Solaris version of its software next year. It's too early to tell if the newest version of Microsoft's server operating system, Windows 2000, will be powerful enough to change customers' minds. Microsoft claims the update, launched in February, can handle the most demanding tasks. And it predicts that sales of its corporate software and services, consisting largely of Windows 2000 server sales and its SQL Server database software, will grow about 20% per quarter, up from 9.3% last quarter. Add to that Microsoft's ability to bundle software that manages databases, tracks orders, and runs applications--all for a modest cost relative to the competition--and you have Microsoft's recipe for becoming the e-commerce technology of choice. ''That's our mission,'' says Ian Rogoff, vice-president in charge of Microsoft's partner programs. It just might be mission impossible. Many corporate customers remain skittish about trusting their most important electronic business to Microsoft. And even low prices can't change perceptions. ''They'll bite bits and pieces of the e-commerce software market off,'' predicts Carl Lenz, research director at Gartner Group Inc. ''But Microsoft won't ever be the preferred operating system for B2B commerce.'' Never? That's a rash prediction when you're talking about Microsoft. But it's safe to say that the company has its work cut out for it. Just ask Unix convert Hoffman at Commerce One. By Jay Greene Please click here for a correction to this story. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					e.biz Contents for Dec. 11, 2000 issue RELATED ITEMS The New Software Whizzes TABLE: Software's Brash Upstarts CHART: The Upstarts Are Growing Fast...Boosting Their Stock Performance... TABLE: ...And Winning Buy Recommendations GRAPHIC: i2 Technologies Snapshot GRAPHIC: Vignette Snapshot GRAPHIC: BEA Systems Snapshot GRAPHIC: Ariba Snapshot GRAPHIC: BroadVision Snapshot Microsoft's Little Bro' TABLE: Still King of the Hill ONLINE ORIGINAL: A Hill of Beans That Could Have Buried BroadVision ONLINE ORIGINAL: How E.piphany Gets Them to See the Light ONLINE ORIGINAL: Q&A with BEA's William Coleman ONLINE ORIGINAL: Q&A with Commerce One's Mark Hoffman INTERACT E-Mail to Business Week Online

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