Last week, Microsoft raised the stakes in its struggle with IBM to determine whose software and development tools will prevail within enterprises in general and iSeries sites in particular. Through product announcements and a new application migration program, the software giant made it clear that it is mobilizing more resources to win over developers and customers. While Microsoft's moves may meet with mixed success, they could influence what IBM and other vendors do to maintain their market positions.
The newswires began buzzing last Monday when Microsoft announced a program to help PeopleSoft customers migrate off their existing applications to alternatives from Microsoft Business Solutions (MBS). Under the program, PeopleSoft customers who purchase MBS applications no later than June 22 of this year will receive 25% discounts on their licenses and the first year of software support. They will also receive migration planning guides, data migration tools, and assistance from Microsoft's system integration partners. Microsoft is extending the program to users of all three of PeopleSoft's product lines. The offer is valid for migration to any of the four MBS product lines: Great Plains, Axapta, Navision, and Solomon.
Two days after the PeopleSoft announcement, Microsoft joined with enterprise software provider SAP to announce deeper ties between their development tools. The vendors unveiled the SAP NetWeaver Portal Development Kit (PDK) for .NET, a tool that enables Microsoft Visual Studio developers to build applications for SAP's Enterprise Portal. The PDK, which is an add-on to Visual Studio .NET 2003, enables customers to create content for SAP Enterprise Portal using any of the languages that Visual Studio supports. That includes ASNA's Visual RPG for .NET, an RPG development tool that compiles to Microsoft's .NET intermediate language assemblies.
As a result of this announcement, it is now easier for iSeries customers that use SAP to develop and deploy portals based on the vendor's NetWeaver middleware. That only serves to heighten a mounting dispute between SAP and IBM. While the two vendors are close partners, their NetWeaver and WebSphere middleware platforms are rapidly becoming competitors at SAP sites. Microsoft's latest announcement with SAP fuels this competition, and its strengthening alliance with the enterprise applications giant only exacerbates the situation. As part of that alliance, for instance, the two firms are creating repository managers to integrate NetWeaver with Microsoft's Windows SharePoint Services and Exchange Server. The repository managers should become available during the first half of this year.
Divide and Conquer?
On their own, Microsoft's latest announcements may not seem very threatening. After all, how many PeopleSoft customers would really toss their core business systems overboard and go through a painful migration to MBS? While I will not go as far as one of my fellow analysts--who said that the PeopleSoft migration offering is not worth the paper it is written on--I am certain that the program will attract only a handful of takers. That does not mean, however, that Microsoft's moves will prove ineffective. Taken as a whole, they could diminish IBM's presence in many of its accounts, especially within iSeries shops.
Consider Microsoft's overall strategy, which I would sum up as follows. First, form alliances with IBM Business Partners who see WebSphere as a competitive threat to their own middleware and development tools. Second, support the products of these firms on the .NET platform, thereby giving them access to hundreds of thousands of Windows developers. Third, mount campaigns designed to win away customers from IBM's middleware and from applications that rely on that middleware, such as those of PeopleSoft. While this is a simplified version of Microsoft's strategy, the bottom line is that the company is working to heighten divisions between IBM and its Business Partners and is using middleware and tools issues as the wedge. Given the resistance of some Business Partners and customers (and particularly iSeries customers) to WebSphere, such a strategy could prove to be a winning one.
What will be interesting to see over the coming weeks is how IBM responds to Microsoft's strategy. On the iSeries front, it will be particularly intriguing to learn what agreements IBM strikes with Oracle Corporation to support PeopleSoft's World and EnterpriseOne product lines. For years, IBM and Oracle have been less than cordial partners, competing as they do in the middleware market. However, now that Microsoft is trying to woo away Oracle's newly acquired customer base and building an alliance with SAP, Oracle may find it prudent to establish closer ties with Big Blue. As for IBM, it has good reasons to work with Oracle to support World and EnterpriseOne users on their current IBM software, as these users comprise major shares of its mid-market and iSeries customer bases. Losing those customers to Microsoft makes sense for neither company, so they may link arms under the principle that "the enemy of my enemy is my friend."
While IBM and Oracle have yet to say how their partnership will change, they may give the world some indication as soon as tomorrow morning. That is when Oracle will hold a Webcast to tell the world about its strategy for integrating PeopleSoft into its operations. If you are a PeopleSoft customer, you should not miss this briefing, so click here to learn all about it. Then, be on the lookout for an article from me that assesses Oracle's announcement.
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at
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