Smaller vendors may shy away from dealing with Microsoft: IBM

LAS VEGAS — Independent software vendors will spurn partnering with Microsoft because it competes with them in business applications, a senior IBM Corp. executive said as his company rolled out more initiatives to lure ISVs into its embrace.

“”It’s inevitable,”” Steve Mills, IBM’s senior software

group vice-president, told reporters at the annual PartnerWorld conference here. “”The sense that Microsoft is going to continue to expand their application base leads thousands of software vendors recognizing they are likely to face formidable competition.””

IBM, on the other hand, stopped building applications several years ago and now pitches itself as an neutral company offering ISVs know-how. That, he said, “”is a powerful value proposition and one that leaves them with room to make money.””

There is, however, a price Big Blue asks software vendors to pay for its financial and marketing support: stop developing their applications in proprietary languages, such as Microsoft’s C# and Visual Basic.

Not that the company is against Windows. Last year IBM did US$2.5 billion in business on systems and applications running Microsoft’s operating system, he said. But its developers only write in languages that are portable across platforms, such as Java and C++. What IBM offers software vendors is expertise in developing on its open standard middleware such as WebSphere.

Asked whether the strategy may backfire if ISVs pressure customers to move their systems to IBM, and customers then complain about a loss of flexibility, Mills shrugged. Applications written in portable code can run on other companies’ systems, he acknowledged. “”If someone comes in and one-ups us, we’ll be out,”” he added.

Sitting in the audience was Michael Haines, a principal analyst for services marketing at Gartner Group, who advises industry giants like Microsoft on their marketing and channel strategies. After leaving the conference, he was to fly to Microsoft headquarters to consult on the problem of dealing with software vendors who are both partners and competitors.

For example, after years of partnering with Vancouver’s Pivotal Corp., a customer relationship management software developer, Microsoft introduced its own CRM app. In recent years Microsoft snapped up Great Plains, Navision and others to create an enterprise resource management suite of products for small and medium companies.

“”Microsoft has got to make some decisions as to what they do,”” Haines said in an interview. Others in the same boat include Oracle, Sun and Hewlett-Packard, he said.

By contrast, IBM is “”somewhat unique”” in that it’s not in the software applications business. “”I’m happy to hear they’re sticking to their guns on that,”” he added, “”because there’s a temptation for a company their size to jump into the fray.””

IBM announced it is increasing attempts to persuade ISVs to build applications on its middleware, part of a strategy to capture a bigger slice of IT business from small and mid-size companies.

To that end it said it will spend US$1 billion this year on ISV-related programs to help them re-write code from proprietary to open languages and standards and on joint marketing efforts. IBM is particularly going after software vendors with industry-specific applications.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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