Microsoft's Next Conquest

Will .NET conquer the Net?

OK, so you're the richest company in the world. You have a monopoly in PC operating systems that you've leveraged into overwhelming dominance in desktop productivity applications and programming languages. You have a decent share of the server market and are the third- or fourth-largest commercial presence on the Internet. Beauty, right?

But then the government rewards you for bringing hundreds of billions of dollars into the U.S. economy by trying to split you in two, which lops a third off your stock's value and sets off a string of me-too lawsuits against you from here to Brussels. That's bad, but you'll survive it. Your real problem is that your market space is in the process of moving to cyberspace-without you.

What do you do? Get busy building another "operating system" to dominate your market's new home, of course. You stick with what works until it quits working.

Microsoft's new Microsoft .NET (pronounced "dot net") cyber programming paradigm is all about creating an Internet that looks as much as possible like the desktop space Microsoft has dominated for the past quarter-century. It's a large collection of programming initiatives, sales channel realignments and new Web standards-too large, frankly, for we mortals to grasp. To succeed, Microsoft needs the cooperation of a lot of different audiences-program developers, hardware developers, chip-makers, Web host providers and even competitors-just like back in the day, when it was getting Windows off the ground. This time, it needs its standards to be adopted not just in computing, but throughout the vast electronics marketplace. It will all probably take years to come to fruition (although Microsoft predicts it will take only two years).

During that time, .NET's code base and its associated acronyms, sub-acronyms and marketing catch phrases will morph in ways that not even Microsoft can foresee. Battles will be fought with entrenched interests over the most trivial aspects of each standard or protocol, and those outcomes will determine the ultimate size and shape of .NET. Microsoft will lose some, but win most. Anyway, the details are far less important to Redmond than the ultimate goal: that there be just a dot's difference between the Net and .NET.

"It doesn't matter what standards you're talking about," says Rob Enderle, vice president of the Giga Information Group, a Santa Clara, California, e-business advisor. "They want to own the critical ones between you and whatever it is you are doing on the Web, and it really doesn't matter what they turn out to be."

Microsoft CEO Steve Ballmer has stated that Microsoft is not out to create an Internet monopoly. But, hey, that's what founder Bill Gates said about Release 1.0 of Windows. Unlike government antitrust lawyers, though, analysts don't see Microsoft as an invincible monopolist in a static competitive landscape bullying Sun Microsystems, Oracle, AOL and other Fortune 500 unfortunates with impunity. It's survival time for a company whose desktop franchise is about to run out, says Arthur Williams, a director of ASP research at Giga Information Group. And .NET is nothing less than a bet-the-company attempt to move that franchise to cyberspace-rather late in the game.

"Microsoft was surprised at how rapidly the World Wide Web and Web-based applications have become important to businesses," agrees Dan Kusnetzky, vice president of system software research at IDC. "When people can access them using a browser, it means that the operating system on the client or server no longer matters."

Mike Hogan, Entrepreneur's technology editor, can be contacted at

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This article was originally published in the November 2000 print edition of Entrepreneur with the headline: Microsoft's Next Conquest.

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