The U.S. government may be trying to break up Microsoft’s monopoly through lawsuits, but the real battle over the company’s future is being fought on a different front. It involves a new way of writing software, called Web services, and it promises to make operating systems, the very thing that forms the foundation of the Microsoft empire, irrelevant.
With Web services, things that are expensive and time consuming today will become cheaper and faster. The first examples are already here.
About a hundred trial Web services are available at www.xmethods.com. They allow applications to check driving conditions in California, get the latest news, download a joke of the day, or check the weather.
It doesn’t sound like much at first-but the mechanism that makes it possible for an application running on one machine to call another application running thousands of miles away, in a different language, on a different operating system, may also solve many of the problems plaguing financial services today. Companies will be able to connect incompatible, legacy applications not just within enterprises but outside them as well.
“Today, with the Internet, applications are built where my software talks to your Web browser, and there’s a person on the other end,” said John Kiger, director of product marketing at BEA Systems, which offers the WebLogic Web services platform.
Web services allow companies to use the Internet to enable business processes to communicate directly, without a person acting as an intermediary, he added.
Specific securities industry applications? “These types of technologies allow you to have straight-through processing all the way from the client to the settlement platform all the way back to the client,” said LabMorgan CTO Ameet Patel.
According to Matthew Conners, securities industry manager at Microsoft, Web services developers will be able to integrate applications that reside on different machines and operating systems. An example of one possible Web service, he said, is an application for traders that has a browser-based front end and a handful of legacy applications providing the heavy-duty processing on the back end.
“It allows you to reuse code located on any server anywhere,” he said. “The potential scenarios are just phenomenal.”
SunGard Data Systems is one company using .Net to provide Web services, with several products already in the pipeline. For example, its AdVantage is a Web-based system for asset managers and private banking clients.
“They [customers] are able to use this Web delivery framework to front-end their asset management system,” said Mack Gill, director of alliances at SunGard. “It’s possible to integrate very closely with even mainframe systems.”
Another SunGard product is Panorama KnowledgeFactory, an information delivery tool for risk managers, both products due out later this year. There are also business-to-consumer implications. Smart cards such as the American Express Blue card or portable devices can simplify e-commerce by calling on Web services to provide security, automatic fill-in of forms, instant credit checks and other functions.
In another example, NTT DoCoMo has already launched a service in which small applications can be downloaded onto cell phones. A financial services company, instead of sending a bandwidth-hogging graphic of a stock chart, can simply send the data points to the cell phone, which then draws the chart from scratch.
One of the most interesting aspects of this technology is that the Windows operating system is irrelevant to the entire process-Web services don’t care about such matters, the same way that a product like Excel doesn’t care whether it’s running on an IBM laptop or a Dell PC.
That’s why Bill Gates has turned the task of producing new versions of Windows over to someone else and is heading Microsoft’s Web services project, which he calls .Net.
“The World Wide Web, if carried to a logical endpoint, breaks all of Microsoft’s control of their accounts and destroys their business model,” said Dan Kusnetzky, VP of systems software research at International Data Corp.
The only way Microsoft will maintain its dominance on the desktop is if it wins the Web services war, which is why the company is throwing enormous resources into the project.
Its chief opponent is Sun Microsystems with its Java technology, already in use for several years to produce applications that can run in virtually any environment.
What was holding up Web services in the past-and is still doing so to some extent today -is the lack of a common language that computers could use to talk to one another. That language is now here.
Both Microsoft and Sun, as well as hundreds of separate industry groups, have affirmed their commitment to XML (eXtensible Markup Language), a relative of the HTML that Web pages are written in.
But while HTML is meant to be looked at by humans, XML is meant to be understood by computer programs.
That common language is still not fully developed, however, and Web services won’t become universal until these missing pieces are filled in. Current XML standards allow one computer to ask a question, and the other computer to give an answer that both will understand.
That’s good enough for simple requests-to run a credit check on this particular customer and charge it to this particular account, to get a stock quote, to check the weather in a particular location.
But the standards now are not that good when it comes to long, detailed conversations, said BEA’s Kiger.
Also missing is a mechanism to keep that conversation safe and secure, he added.One solution could be ebXML (e-business XML), Kiger said.
“It takes Web services to that next step and defines how you do security, transactions, complex conversational or multi-step Web services with multiple participants,” he said. “What you see now with ebXML is a framework for Web services that can be used in relatively complex business-to-business applications.”
A Microsoft-sponsored alternative is BizTalk, which was recently implented at Brazil’s stock exchange and at Ford Motor Co.
Both high-level communication methods are based on XML and Microsoft promises that its systems will play well with others. Even programs in Java, the biggest single threat to Microsoft’s .Net strategy-will be able to interact with .Net applications, the company said, but industry opinion is divided as to whether Microsoft will carry through with that promise.
“You can use both of them at the same time,” affirmed Stephan Van Overtveldt, director for technology marketing at IBM, whose WebSphere Web services platform is built on Sun’s Java technology. “The standards in .Net are the same standards that we have in our entire Web services strategy.”
Right now, Java has an edge over .Net in the Web services space. It already runs on multiple platforms, and it’s been around for several years when it comes to enterprise applications.
“Technology is defined both by standards and products, but also defined and pushed by people,” said Richard Pledereder, SVP of products at Financial Fusion, a middleware vendor for the financial services industry. “Cutting-edge and leading-edge software developers have been moving toward Java. That means we’re going to get better solutions with Java and most of the emerging solutions will be based on Java technology.”
Microsoft has long been battling that attitude. At first, it agreed to license Java technology then changed the source code so that it’s implementation was incompatible with all others.
Sun sued and recently won in court-prompting Microsoft to drop support for Java from Windows XP, due out this fall, and change the security rating of Java to least secure. When it comes to Web services, Microsoft’s decision is mostly a symbolic one, however.
“This doesn’t affect the battle much,” said Randy Heffner, director of application architecture at Giga Information Group. “The type of support that Microsoft’s not providing is a type of support that is much less used and much less required by the enterprise applications that are being built.”
In addition to trying to make Java less attractive, Microsoft is also rolling out its own version of the language, called C# (“C sharp”). It looks kind of like Java, it feels kind of like Java, but it only works in the .Net environment.
“.Net is part of Windows, whereas Java can run over any of the other commercially available operating systems out there,” said Jan Vitek, professor of computer science at Purdue University.
Microsoft’s .Net does have one major advantage over Java technology, however-it allows programmers to use any of the languages they’re familiar in to write their Web services. Microsoft also has another advantage-it’s near-monopoly status.
According to Kusnetzky, Microsoft is trying to leverage its dominance of the desktop market-it’s on 91 percent of machines, compared to Apple, the closest competitor, with just over 4 percent share.
In the past decade, Microsoft used its desktop dominance to become the dominant player in the server market, going from zero to 41 percent since 1992, Kusnetzky said. The same thing is happening now with Web services, he continued.”What Microsoft is doing is creating an environment where Microsoft is a crucial piece of every Web-enabled environment.”
The dominance of the Windows platform is one of the factors that made .Net attractive to SunGard.
“It’s the same platform that is already being used for the majority of desktops in the industry,” said Gill. “This is an easy extension for our clients to implement.”