Microsoft: Back to its old ways?

Is Microsoft's new version of Windows a radical innovation or a return to the company's winner-take-all software strategy from a decade ago?

The next operating system, code-named Longhorn, promises a huge leap forward from current versions of Windows, with better graphics, storage, search and security features, according to analysts and others familiar with the technology. But those features come at a price: Most can be used only through client software that's designed specifically for the new system.

Longhorn, which had its official coming-out party last week, marks Microsoft's return to "fat client" application development--software that resides largely on desktop or portable PCs rather than on a shared server or network. The company is even considering phasing out the development of a stand-alone browser, instead building Hypertext Markup Language (HTML) and Web-based applications that would run directly in Longhorn as "native" Windows code.

The result would be "increased lock-in to Windows," said Michael Silver, an analyst at market research firm Gartner. "Microsoft wants enterprises to write browser applications that take advantage of Longhorn application programming interfaces (APIs), which means that they won't work on non-Longhorn browsers," Silver wrote in a research report last week.

With Longhorn, some industry veterans believe, Microsoft is attempting to steer software development back toward the Windows desktop and away from software such as browser applications that can run on other companies' OSes. Longhorn reinforces Microsoft's commitment to the notion of powerful desktop machines that have large hard drives.

"Ultimately, we're the company that believes in the power of the local hard disk," said Gordon Mangione, corporate vice president of Microsoft's SQL Server team. "It's been the thing that has driven the PC revolution for many, many years."

Indeed, the strategy will sound familiar to students of Microsoft's history. Windows became the dominant OS for PCs by controlling the underlying APIs and file formats. The Internet shifted that balance of power away from the desktop by performing functions on Web servers and related technologies.

The strategy has also created legal complications for Microsoft in recent years. Much of the U.S. Department of Justice's landmark antitrust case against Microsoft focused on the way the company attempted to extend its OS dominance to other products and markets. But any legal ramifications relative to Longhorn are difficult to assess at this stage, because the OS is not expected to debut until late 2005 or early 2006.

In the meantime, it remains unclear whether businesses will use Longhorn's features to build applications if they cannot run in standard HTML browsers from other software makers. Their response will be an important factor to customers that are weighing the benefits of buying the new OS.

To persuade corporate customers to upgrade, Microsoft will likely need to emphasize Longhorn's improved administration of desktop PCs.

"I'd have to understand the business benefits of going back to a client server or fat-client model," said Gary Hensley, director of information technology at Coca-Cola subsidiary Odwalla, which has been using Web-based applications for about three years at substantially reduced PC support costs. "It's pretty simple--show me the bottom-line business benefit. Either it should improve my capability to help extend revenue or give me a better way to manage the infrastructure and my applications to reduce costs."

In many ways, Microsoft's portrayal of Longhorn mirrors the company's "embrace and extend" strategy, which it launched in reaction to a surge in interest in Internet protocols in the mid-1990s.

Blurring the boundaries
Microsoft has laid out parts of this strategy in the past, with its .Net Framework Web services technology and other product initiatives. In fact, the company developed some of Longhorn's basic concepts well before the Web gained prominence. For instance, it originally envisioned a search and storage technology code-named WinFS as part of a Windows update code-named Cairo about a decade ago.

But by building new .Net development technologies into Longhorn, the company is intentionally blurring the lines between Web applications and Windows software in the desktop.

"Microsoft wants to turn more browser applications into Windows applications by offering richer functions," Silver said. Those richer functions include WinFS, new graphics presentation software code-named Avalon, and new communications technology code-named Indigo.

While Microsoft practically owns the market for Web browser software, with a greater than 90 percent market share, it does not exert that same control over Web standards. The explosive popularity of the Web browser even led many experts to predict that fat-client OSes such as Windows would give way to thin-client browser software that left much of the heavy-duty computing power to corporate servers that are connected to PCs.

A wholesale shift to server-based computing never took place, but the continued popularity of rival technologies such as Linux and Java has given companies more options for developing desktop software that doesn't rely on Windows.

Complicating matters further for Microsoft is the challenge it faces in persuading customers to sign up for new licensing agreements when their current contracts expire in a few years. The company hopes that, taken together, the new Longhorn functions will encourage developers to write applications that will work with Windows, not Java or other competing technologies.

Longhorn could also help buoy .Net. Along with IBM, the company has been a key driver behind standards for Web services that promise to increase efficiency by breaking down barriers among companies that use disparate systems. To date, Microsoft's .Net Web services technology has not been the overwhelming success the company had expected.

Already, as Microsoft Chairman Bill Gates told CNET News.com, the company's consumer-oriented initiative, .Net My Services, has been largely reborn as part of Longhorn. The plan, designed to tie individuals and consumers more tightly to Windows through a series of paid services, had been largely abandoned earlier because of partner resistance and concerns over privacy.

The new plan
In a keynote speech that opened last week's company-sponsored developer conference, Gates said Longhorn will make it easy to create applications that require more sophisticated graphics rendering, greater processing power and huge hard drives in future PCs. Windows is being overhauled to process data in the Extensible Markup Language (XML) and to use HTML to publish information, he said.

"The personal computer in less than three years will be a pretty phenomenal device," Gates said. "Exploiting the client, delivering data in the form of XML to the client and then having local rich rendering while still being able to have mapping to HTML for reach--that's something we're making very simple."

Industry analysts say Microsoft needed to overhaul Windows to make its vision a reality. "What Microsoft has realized is that, to really blur the line between the Web and Windows further, they need to make underlying changes in how the plumbing is done," said Stephen O'Grady, an analyst at RedMonk.

One of the most significant changes in that plumbing is WinFX, Longhorn's programming interface, which represents an evolution of the .Net Framework software that's needed to run Web services applications. The XML programming model is separate from Windows and is not packaged with desktop systems, but WinFX will be integrated into Longhorn, according to Microsoft.

Once that happens, "it will be like Microsoft taking one hand from behind its back in its boxing match with Java companies," said Rob Helm, an analyst at Directions on Microsoft. "Potentially every PC will ship .Net-ready, which will make it much more interesting" for application developers, he added.

At Microsoft's developer conference, for example, Amazon.com showed how it has used the Avalon graphics technology and the WinFS file system in Longhorn to create an improved shopping site.

Amazon's chief technology officer, Allan Vermeulen, showed how a Web shopper can do a number of tasks that could not easily be done from within a browser, such as rapidly filtering search results for cameras and viewing a photo of a camera as a three-dimensional object. Information from the e-commerce site could also be easily shared with a person's calendar application.

While Microsoft's franchise rests largely on the desktop, its largest competitors--such as Oracle, Sun Microsystems, IBM and BEA Systems--use Java software that resides on network servers. In general, the Java system is built around consolidating information on a server through Web portal software and sending information to individual computers through a browser.

Such technology can be particularly useful for corporate customers that want to centralize applications for more control over software they use on PCs throughout their networks.

Sun Microsystems, a major proponent of server computing and a fierce critic of Microsoft, says it gives its employees "smart cards" that allow them to share stripped-down Sun Ray "ultra-thin client" machines that rely on servers for information storage and delivery. That technology, Sun says, cuts down on its administrative costs and can be used for a broader range of tasks.

To counter such claims, Microsoft executives are touting the way Longhorn aims to simplify the use and maintenance of applications. Using a Longhorn feature that's called ClickOnce, a custom Windows application will get regular updates that are downloaded from a server much like a Web site publishes the most recent version of a page, said Eric Rudder, senior vice president of servers and tools.

Microsoft is also investing in a comprehensive plan called Dynamic Systems Initiative, which aims to give corporate customers more control over their systems.

Nevertheless, Microsoft may face an uphill battle in convincing customers that they need to spend more on a new OS at a time when many companies are cutting their technology budgets.

"Microsoft's concern is 'good enough,'" Helm said. "They are concerned that people are happy with their current desktops and stretch upgrade cycles out longer and longer. That opens a long-term threat from Linux."

And regardless of Longhorn's features or benefits, Microsoft must overcome customer resistance to get locked in to any particular technology plan.

As Silver said, for companies that want to leave their options open, "they should be using tools and writing applications for generic browsers and not using features that are only going to be available on Windows."