Microsoft, whose stock has traded sideways for months, put on a full-court press Thursday to convince Wall Street that the future of computing is still being dreamed up in Redmond.
In a full day of presentations to securities analysts, company executives offered statistics and war stories in order to paint a picture of building momentum behind Windows 2000, SQL Server and Office offerings. In particular, Microsoft touted an agreement with Lycos Network to use the company's operating system as its primary technology platform, and EuroClear Online, the world's largest settlement system, which selected Microsoft to outfit its enterprise systems.
Microsoft showed a sneak peek of a "technical preview" alpha release of its next version of Office for Windows, known to beta testers as Office 10. Executives also talked up "Tahoe", a forthcoming document management server product.
But the theme of the day was the road to Microsoft .NET, the umbrella of technology and product directions presented by Microsoft a month ago. That was the pretext for a more comprehensive sales pitch to dispel accumulating doubts about Microsoft, both on the legal and technology fronts.
"We're excited. There are lots of big wins we're getting," said Microsoft chief executive Steve Ballmer in an interview.
Indeed, Chris Atkinson, who runs the company's .NET Solutions group, set the tone when he said the battle at the high-end had shifted in Microsoft's favour.
In the first full year of SQL Server growth, Atkinson said the business was averaging an annual run rate of $1bn, adding that the coming year would witness the "broadest release" of enterprise servers.
Taking particular aim at its two rivals, Atkinson tweaked the competition for offering products containing outdated code bases that were costly and cumbersome to integrate. He referred to just-released TPC benchmark results, where the performance of Microsoft's servers bested those of Oracle and Sun Microsystems, the company's two stiffest competitors in the application server market.
Microsoft's February SQL Server 2000 benchmarks were recently tossed out by the Transaction Processing Council, following some behind-the-scenes challenges brought by Oracle and Sun. Microsoft's new results, released on Thursday, still fall short of IBM's recently minted DB/2-on-Windows-2000 benchmarks.
The financial analysts were a tough and discerning crowd, and it was not at all clear how persuaded they were by benchmark results -- which can always be challenged or reinterpreted by a rival.
"From the software perspective, [.NET] makes sense but of course, it will take some time for more general acceptance," said Michael Parekh, an analyst with Goldman Sachs. "If they will buy off on the vision that Microsoft has developed the next-generation platform for Internet developed applications, it'll work," said analyst Tim Bajarin, president of Creative Strategies.
Elsewhere, Microsoft said it will release the first beta version of its consumer version of its Windows 2000 successor, codenamed Whistler Personal, in August, as company officials offered more details about the rollout of future versions of its operating systems.
Microsoft also said it will release by August Windows 2000 SP1 and Windows 2000 Data Centre, two products aimed at business users. SP1 originally was scheduled to ship the week of 17 July, according to information Microsoft provided to its beta testers. The company has declined to provide any information on what is holding up the first collection of fixes and patches to Windows 2000.
The big driver behind Microsoft's revenue growth remains its Office business. Bob Muglia, who runs the business productivity group in charge of Office, said sales of the latest version of the product suite are outpacing sales of Office 97 and growing about 15 percent for the current fiscal year.
As the office suite market has grown increasingly saturated, Microsoft's management has been faced by recurring questions about its ability to convince large customers to upgrade. The company is hoping to sell the combination of Office 2000 and Windows 2000 as a one-two punch.
Muglia said that a "very large percentage" of Microsoft's corporate customers will deploy the two lines together. As the company acknowledged during last week's fourth quarter earnings call, however, so far, simultaneous Office 2000-Windows 2000 deployments have been few and far between.
Meanwhile, Muglia said that the growth in multi-year contracts with Microsoft's larger customers had helped stabilise pricing on Office, which has historically had a downward trend in price.
During the analyst meeting Thursday, Microsoft publicly demonstrated for the first time a server product codenamed "Tahoe", which enables a company to deploy an intranet portal replete with better document management and team collaboration features. The product is expected to debut "sometime in early 2001", according to Muglia.
The company also showed off a few of the forthcoming features in Office 10, a product that may or may not debut under the name "Office .NET". Microsoft executives highlighted the Web Parts components and services that allow developers and users to build so-called "Digital Dashboard" portals. A catalogue of these parts will be included with Office 10. Officials also showed off Office 10's new formatting options and work views, as well as its Web data-storage capability. Microsoft declined to provide any information on when it will release a first beta or final release of Office 10.
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