This week Microsoft will host MIX 06 in Las Vegas, its first-ever show for developers and designers of the new era of distributed computing, in which the Internet is used as a platform for new applications and services.
Microsoft, with its vested interest in the Windows client OS, has been accused of moving too slowly to embrace this trend, popularly dubbed Web 2.0. But analysts said the company will prove next week that it's more savvy than some may think in this area.
While companies such as Google and Yahoo have been getting a lot of attention as Web 2.0 pioneers for offering consumer and small-business services that use the Web as a platform, Microsoft will show a different tack for embracing Web 2.0 at MIX 06, said Rob Helm, director of research for Directions on Microsoft.
While Microsoft has certainly recognized it should keep pace with Google and Yahoo -- hence the launch and continued development of its Windows Live Web-based services strategy -- it will turn to a tried-and-true business, developer tools, to differentiate itself from Web 2.0 rivals, he said.
"If you look at Microsoft's two biggest businesses, Windows and Office, they don't have an obvious Web 2.0 play," Helm said. "But the server and tools business at Microsoft has a vested interested in making Web 2.0 work, and they have a strategy to do it."
Helm, who has been briefed under embargo about Microsoft's plans for MIX 06, said the company will show developers next week how to turn Web 2.0 from concept to reality by offering tools that make the development of rich Internet applications digestible for the masses. This strategy is similar to the way the company created easy-to-use development tools for the GUI (graphical user interface) in the past, he said.
"Microsoft's server and tools unit has proved they can take something like Web 2.0 and make it easier to program for," Helm said. "It has a very viable business model there."
Dana Gardner, principal analyst for Interarbor Solutions, said Microsoft is playing it safe in the way it is supporting Web 2.0 by embracing new Internet technologies while ensuring its traditional server-software business remains intact.
In this way, the company proves it can move with changes in technology and market demand, but also avoids alienating a core group of users that run their businesses using Microsoft's core infrastructure software, Gardner said.
"Microsoft is supporting Web 2.0 as a hedge to make sure they have a comprehensive toolset [for the Internet as a platform], which by the way still has the Common Language Runtime and .Net that therefore deliver these applications for deployment on a Windows system," Gardner said.
He added that Microsoft also realizes the margins it makes on software licensing are far greater than it can hope to make from services, at least in the near term, and so has no intention of cannibalizing that business as it evolves to support new business models that Web 2.0 presents.
"The amount of revenue from licensing software far outstrips the addressable market for services," Gardner said. "Microsoft will hedge the future -- they'll go there -- but for the satisfaction of their investors, the older model around their licenses is where it's at."
Even with Web 2.0 developer tools as a major theme at MIX 06, Microsoft enthusiasts may have to wait a bit longer to get their hands on at least one of the next-generation Web design and development tools that Microsoft introduced at its Professional Developers Conference in Los Angeles in September. The release of a test version of Expression Web Designer -- one of the tools with which Microsoft plans to rival Adobe System's extensive Web development portfolio -- is rumored to be on hold, though many expected it would be released at MIX 06.
Microsoft so far remains mum on whether the tool itself will make an official appearance at MIX 06, though it will be featured at the show in a session called "Expression Web Designer Overview," according to the MIX 06 Web site.