|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | |
MAY 10, 2004
By Alex Salkever A Big Blue Gauntlet for Microsoft IBM's new Workplace just might succeed where so many earlier attempts have failed: Getting complex software off the desktop With its new Workplace product, IBM (IBM ) has launched a frontal attack on Microsoft's (MSFT ) dominance of the desktop, but you can expect to hear Gates & Co. repeatedly shrug off the assault as the latest in a long line of blanks fired at the world's most successful software company (see BW Online, 5/10/04, "Office, Beware -- Here Comes Workplace"). Don't believe it. IBM's move could actually prove to be the biggest threat to Microsoft's hammerlock on PC software since IBM was pushing its own competing operating system, OS/2, from 1987 through 1996. A confluence of factors could conspire to make Workplace the first legitimate mass-market competitor to Microsoft's Office software suite. That, in turn, could have far ranging consequences. It might open up a wave of competition to the core Windows operating system itself. Should either of these possibilities transpire, the Colossus of Redmond could find itself having to cut prices and slash margins to compete. Not that CEO Steve Ballmer and Chairman Bill Gates are shaking in their boots. "We have competed with IBM in this space for a very long time and done very well," says Dan Leach, Microsoft Office Systems group product manager. "UTILITY COMPUTING." In a nutshell, Workplace takes Microsoft Office and moves it to a server. This isn't a new concept. Two of tech's top CEOs, Sun Microsystems' (SUNW ) Scott McNealy, and Oracle's (ORCL ) Lawrence Ellison, have long espoused the idea of moving desktop software into the back office. And dozens of Internet startups were launched around the idea of delivering complex software capabilities through a Web browser and a Net connection. Most failed, but several have done well, including Salesforce.com, which delivers so-called customer-relationship-management software over the Net. Even IBM has been pushing the concepts behind Workplace for several years, calling it "utility computing" and rolling out these capabilities in a more limited fashion. The model's attraction is clear. Workplace administrators will need to service only a single machine, the server that houses the software. The only thing users need to run Workplace is stripped-down software installed on their PCs and a fast connection to a corporate network or the Internet. By extension, users don't have to worry about complicated software upgrades or installations, let alone the constant problems that come from conflicts between different programs installed on desktop PCs. Sounds great, but it has never worked before. However, it just might this time with IBM's Workplace. Here's why. PERCEPTION COUNTS. For starters, IBM Global Services is the largest and most influential tech consulting shop on the planet. Big Blue has more consultants in the trenches than Oracle, Sun, and Microsoft combined. So unlike past efforts at moving desktop applications to the network, Workplace enjoys an unrivaled global sales force. Market perception is also on IBM's side. Sun is still seen as a hardware company with limited experience in software beyond core operating systems and back-office Internet software. Oracle is considered a database company first and foremost. That's different than IBM, which has been selling Corporate America fleets of sleek PCs and desktops for decades and still competes heavily with Hewlett-Packard (HPQ ) and Dell (DELL ) in the business PC market. In the past, too, attempts at network computing on desktops didn't work because broadband Internet connectivity wasn't ubiquitous. The link back to the network data center -- where software like Workplace runs -- was slower than the Lincoln Tunnel coming back into Manhattan after a holiday weekend. Now the growth of wireless broadband networks has made speedy access common in business environments such as convention centers, airports, and hotels, which allows applications such as Workplace to appeal to workers on the go. And a new wave of wireless data services that run at close to broadband speeds could soon make high-velocity connectivity nearly ubiquitous in major cities and for large swathes of rural America. IMPRESSIVE BUT UNNEEDED. Another factor in Workplace's favor is the growing realization that Microsoft Office is about 95% overkill for the average desktop user. Most folks use Office for basic word processing, spreadsheets, e-mail, and collaboration software that helps them sync up and talk to co-workers and partners. But very few use any of those programs to anywhere near their full capabilities. This has led more and more chief technology officers to ask why they're paying so much for Office when they take advantage of so little of its impressive but unnecessary capabilities. A simplification trend will build as companies strip down desktop software and give employees only what they need, which in many cases is a Web browser and an advanced e-mail program that incorporates some word processing capabilities -- and not much more. Microsoft's recent product delays have also done more than merely give competitors an opening while the world waits for the next big operating system upgrade, Longhorn, to pour forth from Redmond. Originally slated for 2004 delivery, Longhorn has been pushed back into 2006 (see BW Online, 4/19/04, "How Microsoft Is Clipping Longhorn"). These delays have ticked off thousands of Microsoft customers who paid big bucks for software subscriptions, after Gates & Co. converted most of its corporate customers to those subscriptions two years ago. The idea was to create a more steady revenue stream, rather than allowing sales to fluctuate wildly depending on when product upgrades rolled out. CONSUMER MINDSHARE. The subscriptions cost more than just buying the software in the box. But part of the deal was that customers would get free upgrades during the subscription term. In the past, they would have had to pay for new versions. But the lack of real upgrades to Office and other software covered by Microsoft's subscription package has left many customers feeling cheated. And the postponements of Microsoft's Longhorn operating system have enflamed that dissatisfaction. (That might be a key reason why Microsoft appears set to release a major upgrade to Windows XP, something it hadn't planned on doing previously.) Finally, should IBM decide to turn up the dial and move into the consumer realm, it's the only player among the network-computing pack with a brand that resonates from the boardroom to the spare bedroom where Joe and Jane Sixpack keeps their PC. Only Microsoft can top IBM in terms of consumer mindshare. CEO Steve Balmer would be loath to cannibalize either Windows or Office by offering a competing online service or, more likely, by slashing prices. Either response might not kick into gear until he faced no alternative, at which point it might be too late. SORRY HISTORY. Sure, Workplace could end up being a total boondoggle. Microsoft's Leach categorizes it as another effort by IBM to get its hands on more of the customers' wallets. "This is an extension of their strategy to use IBM middleware, services, and infrastructure to deliver something that our customers already have," says Leach. Indeed, Big Blue has to overcome a long history of failed network applications aimed at the masses. And no one expects Microsoft to roll over and die. But the world has changed, and IBM may finally have reached a point where Redmond's desktop chokehold might prove more choke than hold.  Salkever is BusinessWeek Online's Technology editor
BW MALL
SPONSORED LINKS
Buy a link now!Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
