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A "Milestone" for Web Services

Microsoft often has been tagged as a tech laggard that achieved its success by co-opting the innovation of others. But one technology where it's hard to dispute Microsoft's (MSFT) leadership is Web services.

Redmond was among the earliest to recognize the potential of developing software in a new way that enables applications written with code for different operating systems to communicate with one another. That way, partner outfits can get their computer systems to work seamlessly. Moreover, companies can introduce new technology and make them work with their older systems, and do so with far less hassle.

That's the promise, anyway. Getting on for five years years after Microsoft unveiled its Web-services gambit, dubbed .Net, it remains more vision than reality. Microsoft has several customers that have developed applications using .Net technology. But widespread use of Web-services technology is still a ways off.

That's because Microsoft and its rivals have been busy creating a foundation on which Web services will run. It's arcane, mind-numbing technology. But without the foundation -- technical standards that the industry agrees to use in order to push Web services forward -- the business would never emerge.

For Microsoft, a cornerstone of its Web-services strategy is about to be laid. It will soon reveal the details of Indigo, the code name for a new way Microsoft hopes developers will create software applications. Indigo will be unveiled at a Feb. 8 conference for developers who write programs to run on top of Microsoft's technology.

Dan'l Lewin, Microsoft vice-president, recently talked about the company's Web-services strategy with BusinessWeek Seattle Bureau Chief Jay Greene. Edited excerpts of their conversation follow:

Q: When Microsoft introduced .Net in 2000, there was a lot of buzz about Web services. Today, though, there seems to be less. Why is that?

A: Well, there are a couple reasons, I suspect. First, it was a new term, and there is always lots of chatter around how you define it. And if you go back a few years, there was a lot of foundation work [to be done]. We've seen incredible success and progress at the foundation level, which is typically not as visible to the consumer.

In a way, it's kind of like the analogy of grass growing. You throw the seeds out. The first thing that happens is the root system sprouts. So we're building out the root system, and that's going very, very well. There is immense and tremendous progress. And what we're starting to see now are very interesting things coming out on the surface.

Q: What kinds of things?

A: We're starting to see an incredible amount of use of Web-service standards. Financial services is always a leading-indicator market for new technologies because their product -- money -- is digital. [Web services'] bits and technology is an integral part of how they reduce friction and move the data around. That's what Web services are all about -- secure, reliable ways to move the data around.

Thomson Financial is leveraging Web services, Microsoft Office, and Excel, providing products to customers for capturing Thomson's data feeds and analyzing and manipulating them in very sophisticated ways.

Q: You talked about the root system developing. Is it important for you to get folks excited about Web Services again?

A: I think not. I think it's glaringly obvious that what was, if you will, brown earth is now all green. Everybody is using Web services as the methodology and the technique for building out the next generation of applications and connectivity.

Q: Do you think that's true with chief information officers? Do they really get it?

A: In any area where people are thinking through how to leverage their existing IT assets and connecting with their customers and partners, it's the way you do stuff. I don't know that re-evangelism is necessary. We want to always highlight the successes and point out the bright light and certain areas where things are interesting. But right now, I think it's happening. I don't think there's any question about it.

Q: But if you look at CIO surveys that ask about spending plans for the next 6, 12, or 18 months, they don't say they're going to invest in Web Services as much as they say that they plan to invest in specific business software.

A: How they implement that technology is really the key. And they will be implementing using Web services. It's the only way to go because it really is about interoperating and moving the data. They want to talk about how they're going to connect up their partners and their supply chain. How do you think they're going to move that data around? Web services.

Q: Microsoft is about to roll out a new version of its software development technology that will include Indigo. Without getting too geeky, what's the under the hood? Stuff that will increase the speed of the uptake of Web services?

A: Indigo makes it really easy for anyone to program to the Web-services standards to build out these new applications. Indigo very well could be the milestone by which people will build more and more applications that invoke Web-services standards.

Q: There's a lot of discussion these days about Linux operating system software and Open Office, an alternative to your Office software suite. It seems to me that Microsoft is trying to drive innovation with Web services into its core products -- Windows and Office -- to keep them ever more relevant.

A: Absolutely. The core will continually evolve -- and it will be, frankly, very fast and rapid progress using these Web-services standards, which we're baking into all of our core infrastructure technology. It's our job to innovate at the core so that people will continue to choose Windows over the alternative for those infrastructure technologies.

Q: Who do you see as your biggest competitors here? Is it IBM, or do you think about others?

A: Well, IBM (IBM) is clearly a primary marketplace competitor. They're also a collaborator in a big way developing standards. And they also have a very large practice implementing our technologies. We're doing a lot with Sun (SUN) regarding interoperability, but we also compete on implementation.

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