Microsoft Corp. announced a series of steps today that sharply refocus its corporate strategy, effectively making the World Wide Web, rather than the personal computer, the center of its efforts.
The company hopes the moves, which it calls "Windows Distributed InterNet Architecture 2000," or DNA, will help it catch or surpass Sun Microsystems, a leader in the market for Internet servers--powerful computers that manage Web sites and e-commerce--and stave off the surging popularity of the free Linux operating system, which competes with Microsoft's Windows NT to run those servers.
"The market is moving away from the PC and toward the Web, and if they don't find a way to move with it, the market will pass them by," said Rob Enderle, an analyst with Norwell, Mass.-based Giga Information Group.
If Microsoft persuades software developers to deploy its tools for a wide range of Web services and applications, it will enhance the company's presence in a burgeoning world of Internet-linked appliances--from hand-held computers and TV set-top boxes to garden sprinklers and car alarms--where it remains one player among many.
Microsoft President Steve Ballmer told reporters and industry analysts that the DNA strategy will be rolled out over the next two years.
Some industry watchers view the strategy as Microsoft's latest effort to dominate Web development. They say the company is using a three-pronged strategy that proved unstoppable for the desktop PC versions of its Windows operating system and its office productivity programs:
First, Microsoft creates tight linkages between all its products--Web browser, operating systems, software applications and server products--creating ostensible synergies that competitors find difficult to duplicate.
Then the software giant uses its influence over developers and PC makers to control the evolution of key technology standards in ways that favor Microsoft products.
Finally, the company tries to deter efforts by potential competitors by pre-announcing products and services--"vaporware" in industry parlance--that may not become available for extended periods.
"Microsoft has been looking for ways to capture the high ground in Web standards for at least several years," said Jeffrey Tarter, editor of the industry publication Soft-Letter. "The obvious problem here is that Microsoft DNA for the Web looks like a thinly disguised attempt to make all other technologies [such as those developed by Sun] equivalent to some kind of alien life form."
Microsoft portrays DNA as its most significant redirection since 1995, when it rapidly shifted emphasis to the explosive growth of the Web, creating its Internet Explorer browser and orienting its other applications toward the Internet experience.
The market greeted the news without enthusiasm, however; shares in Redmond, Wash.-based Microsoft fell $1.12 1/2 to close at $93.87 1/2 today on the Nasdaq Stock Market.
The first of the products will be folded into Windows 2000, the latest incarnation of Microsoft's operating system, due out late this year. Ultimately, the company says it will provide "megaservices" on its Microsoft Network Web site that will amount to building blocks for e-commerce.