Microsoft is the king of the desktop hill, but there is no shortage of very competent competitors who are trying to dislodge its crown. Gaurav Patra & Shipra Arora report

Today, Microsoft is ruling the desktop software category. But its competitors have come out with new solutions and strategies to counter the giant. Be it Sun, IBM or Oracle— Microsoft will see increasing competition from all these majors. In the days to come, will it be a tussle between StarOffice and MicrosoftOffice? Or is Oracle’s new collaborative suite going to give a tough time to Microsoft Exchange? Or is it Lotus which will rule the market?

The marketplace is now full of software packages from different vendors which give the IS community a range of choices. Moreover, some users have reservations about the new software licensing policy of Microsoft—which gives other players the opportunity to get a foot in the door. The question is, how are all these players going to position themselves, and what’s their strategy to survive this fierce competition?

K P unnikrishnan points out that Microsoft is discontinuing support of Office versions for Windows 95, whereas StarOffice will continue to support this platform in the next version

Collaborative apps market
According to a recent survey by IDC India, Microsoft Exchange 2000 Server is the number one enterprise mail messaging and collaboration platform. IDC says that Exchange 2000 has 60 percent penetration in the mail server market in India. Unix Send Mail is second with 14 percent followed by Netscape Mail Messenger and Lotus Notes with 11 percent and 10 percent respectively.

This to some extent demonstrates Microsoft’s commitment to deliver a compelling messaging infrastructure to enterprise customers. Microsoft Exchange 2000 Server has experienced significant momentum in the banking and financial services, telecom, IT services and government sectors in India, and one expects the company to extend this growth to other growing segments like education and ITES in future. Today, enterprise customers are increasingly opting for messaging and collaboration software that not only offer scalability and reliability, but also an easy-to-manage solution that provides maximum return on investment (RoI). Since messaging infrastructure is fast evolving as a backbone for supporting organisational initiatives towards collaboration, e-learning and knowledge management, a stronghold in this space will definitely be an advantage for Microsoft. Continuous product improvement aimed at higher alignment with evolving user needs will help it gain and consolidate its leadership in this constantly evolving space.

What does Microsoft have in mind?
Continuous product improvement. Keeping this in mind, Microsoft has recently announced its new Exchange initiative code-named Titanium. “This is an update to our Exchange e-mail system and Outlook e-mail client, and will address three key needs by improving inbox management, beefing up wireless access, and making it possible to support more users with each Exchange server,” says Pankaj Ukay, product manager for Exchange at Microsoft India.

According to the company, this new suite will let users make better use of their e-mail while driving down costs for Exchange administrators. On the back end, Exchange will include the ability to create a volume shadow copy, essentially a snapshot of the Exchange database that can be taken at frequent intervals throughout the day, and will refer to backup tapes when problems occur. The new suite, Titanium, will also include support for wireless e-mail access via PDAs and cell phones which currently requires the deployment of Microsoft’s mobile information server.

Features are always considered to be the key factor which drives groupware implementation in an organisation. Is the groupware application compatible with the OS or NOS that an organisation has? Does it address the security concerns for mail messaging? What’s the total cost of ownership involved? How much time is it going to take for the end-user to learn it? Keeping this in mind, Microsoft is making this a feature-rich solution.

From the user perspective, as far as selecting a collaborative tool is concerned, factors like features, ease of use and deployment are critical. “Stability, compatibility with other mailing systems, scalability of the mailing system in terms of upgrades, capacity, groupware integration, Web interface, compatibility with Internet SMTP Virus Gateway, and messaging features are the key factors that help in selecting a collaborative solution,” says R Srinivasan, assistant manager, information technology, Indraprastha Apollo Hospital.

Adds Hilal Isar Khan, manager, information technology, Honda Siel Cars India, “I believe features like security (incoming and outgoing scan), availability of antivirus for the specific mail server, integration with existing groupware applications, mail encryption and decryption, delivery report options, and blocking of desired IDs are key for any solution.”

In Exchange, the critical component which comes in from the IT perspective is a centralised directory. “Exchange 2000 is an application which integrates with the Windows 2000 active directory deployment. So there is no new learning required from the enterprise IT perspective. It saves a lot of time and money for the organisation,” says Ukay. The fact is that enterprises are now looking at consolidating their collaborative set-up. “Exchange 2000 allows them to consolidate their complete collaborative infrastructure the way they want it,” Ukay adds. Microsoft is basically targeting segments like banking and finance, government, ITES, and telecom for its collaborative business.

Titanium
Most CIOs today are talking about reliability and scalability. Knowing this, Microsoft is to launch Titanium by mid-2003. According to Microsoft, as far as scalability is concerned, while enterprises can go up to two nodes clustering on Exchange 2000, with Titanium they can go up to eight nodes. Today, at any data centre, clustering does not go beyond a maximum of four nodes. “We are talking about eight node clustering. This is very relevant from the Indian perspective. That’s another server consolidation scenario we are talking about,” says Ukay.

Another key feature that the company is adding in Titanium is mobility. Microsoft Exchange already had a mobility component in its mobile information server. What they have now done is to integrate the mobility component into the Titanium server itself. What does this mobility mean to the end-user? It means he can have a wireless card (or any other suitable mobile technology option) on his mobile device. Through this he can straightaway connect to the server and download mails—all that needs to be done is synchronise the handheld with the server. Since Microsoft has integrated mobility into the core product itself, when someone does a Titanium deployment in the organisation, all mobility functions will be taken care of. This is a very relevant feature since in future one will find more and more mobile users in corporates.

From a collaborative perspective, Microsoft has announced Exchange Server Objects. Till now, developers who wanted to work on the exchange platform used either EDO/CDO to develop onto Exchange 2000. But the Titanium platform is a completely .NET integrated framework. In this environment, using Exchange Server Objects, one can connect to the exchange store, can have information from anywhere across any application in one organisation, and collaborate in the context of the application (contextual collaboration). That’s what enterprises want to do.

“Collaboration is no more limited to a collaborative product, what you would call exchange or Lotus Notes. The value that is going to define a collaborative product is ‘how do I scale my existing applications to a scenario which enhances my end-user productivity,’ says Ukay. Still, users feel that the success of Titanium to a great extent will depend on the pricing and the value-for-money proposition.

On the other hand, players like Oracle and IBM’s Lotus are all beefed up with their new products. Some of the features which customers look for in a collaborative application from the user’s perspective are ease of use, accessibility and quick access to information. From the CIO’s perspective they need features like manageability, scalability and easy upgradability.

Pradeep Nair says in a market like India, we need to continually enhance customer value through competitive, low cost-of-ownership solutions

What Oracle offers
In the collaborative application arena, Oracle has decided to take Microsoft head-on. It has recently launched a new Oracle Collaboration Suite. According to company sources, this will be more secure, reliable, and virus-free than Microsoft’s Exchange and Outlook products; the suite will also be competitively priced. Oracle’s product will let users store documents, e-mail, voice mail, and data files in Oracle 9i, and search for them by date and keyword. But whatever features it might have, Oracle has to prove that its product can safeguard mail messages and address lists, and also protect business data.

The new collaboration suite also aims at leveraging Oracle’s database expertise to lower the cost and increase the security of enterprise messaging. The suite includes tools for e-mail, real-time conferencing, voice mail, workflow, and an integrated LDAP directory. Collaboration innovations include the ability to gain voice access to messages, and ultra search capabilities, which span multiple data formats and types. “Preliminary study of this suite seems to be quite encouraging. Probably the lower cost of ownership with the added advantage of the central repository and searching capability would make it a leader,” says Devendra Singh, senior systems executive at Nirula’s Hotels.

“They should release a good number of free copies to mid-size companies who would build opinion through word-of-mouth. In the software field, popularity makes a product flourish,” he adds.

Comments Arindam Bose, head of information technology at LG Electronics India, “The recently-launched new collaboration suite from Oracle is very good. But I believe this is more suitable for really big enterprises and not for smaller firms.”

The suite features clustering and high-availability technology from the Oracle 9i database and application servers. An embedded Oracle database will enable centralised storage of files, messages and user information, while technology from its application server will deliver an integrated Web and directory server as well as infrastructure to support single sign-on capabilities.

Being a strong player in the structured information market space through its database software gives Oracle an advantage over its competitors. “We are not just talking about capturing internal and to some extent external structured information, but also the internal and external unstructured information,” says Satinder Grover, general manager, e-commerce at Oracle India.

With its existing expertise in databases and middleware, Oracle is in a position to tap and handle an organisation’s unstructured information too. Being built on the database itself, Oracle’s collaborative suite is able to leverage all the powerful functionalities and features of the database application. “The database is the most powerful place to store information. We use all the advantages of the Oracle database to make the collaborative applications more effective. Some companies have tried to put an e-mail application on database but have failed in that. We have successfully done it,” informs Grover.

The Oracle collaboration suite is also portable across platforms. It works on all operating systems and is not restricted to a particular platform. Customers also have the choice to continue with Microsoft Outlook as the messaging client even while retaining the back-end advantages of Oracle. “We are not using a Microsoft product but are providing choice to the users. Generally, if users in an organisation are already using Microsoft Outlook as the front-end, it’s difficult to make them change. In order to take care of this problem we provide options to the users,” adds Grover.

Oracle aims to beat Microsoft on back-end technology, so its offering has compatibility with the existing system of the users as most have disparate systems and Oracle’s offering provides interfaces between these disparate systems.

Another advantage which Oracle’s collaboration suite provides is the searching and indexing capability—a critical component for a collaboration application. There is unstructured information lying in a lot of files, mails, external websites, etc. The ultra search capability can track all these traces of information which are lying in different locations. Here Oracle is talking not just of e-mail but also information lying on desktops and other devices.

Further, Oracle’s suite is accessible from any type of access device, Web browser, e-mail, PDA, and external website. The suite also tries to unify all messages like e-mail and fax, and bring together all content information. Scalability and security are key aspects of Oracle’s offering. Starting with an Intel Linux box, the customer can keep adding upon it and scaling it up; this addresses the scalability issue while keeping cost down.

As far as the cost factor is concerned, the company says its collaboration suite offers lower cost of procuring and running the application. “We leverage our database expertise to keep the cost down,” explains Grover. Oracle also provides single point architecture that is homogenous across the organisation. This brings down the total cost of infrastructure and provides homogenous infrastructure across the organisation. Oracle delivers complete information technology architecture; in other words, an end-to-end solution. Since the user will go in for replacements in the future (generally a software lasts for about three-four years), Oracle has the opportunity to provide them with all their applications in the next replacement cycle.

Grover believes that Microsoft’s new initiative of launching an upgraded version of its Exchange e-mail system and Outlook e-mail client does not pose any sort of threat to them. “People who have been using our database find more comfort in working with Oracle technologies,” he insists. As far as IBM’s Lotus is concerned, he believes that there is not much competition from there also as it works on the file system.

Collaborative applications are being used primarily by large organisations (if we consider the revenue generation by collaborative applications). Of these, most of them are MNCs who are bound to use a particular application as per norms. Hence this is a price insensitive market. However, as user maturity grows and Indian organisations start using the same, value-for-money and not necessarily the price will become a key parameter which will influence the purchase decision.

Though it is difficult to estimate the extent of the contribution of the new software assurance licensing policy, it will definitely have a positive impact on Microsoft's business, says Deepak Shagrithaya

The Lotus initiative
For most companies in most economies/industries, their employees (including partners) are the best means of creating a sustainable competitive advantage. The challenge facing such companies is to create an environment and set of tools to provide employees with access to critical information and to facilitate more effective workforce and customer relationships. Essentially, it is how to help their workforce do more with less; how to help the organisation make better decisions, be more responsive and nimble; and how to shorten the distance between the employee and the customer. IBM’s Lotus as a collaborative solution provider thinks on these lines. “We see our customers asking for more than a collaborative suite of applications—that was years ago. Moving forward, our customers are asking for collaborative capability in whatever environment they might be working in,” says Pradeep Nair, country manager of the Lotus software group at IBM India. Giving an example, he says that while using an ERP application to interact with his suppliers, a purchasing manager setting up an appointment with one of them might need the scheduling capability of Domino without exiting the ERP application itself. This is an example of what is called contextual collaboration. It means the collaborative needs of an organisation or user are defined by the context he might be operating in, and that context changes over the course of the workday. Even Microsoft is talking about contextual collaboration. This shows that contextual collaboration is one of the major trends that the players will exploit in the days to come.

With the IBM Lotus Dynamic Workplaces solutions, the company brings a broad portfolio of collaborative technologies, services and assets to provide the necessary tools and infrastructure to help companies meet the challenge of facilitating contextual collaboration. The objective of the company’s offerings is to provide simple, integrated and personalised access to information and applications while facilitating interaction among people so that employees can do their jobs more efficiently and effectively, and the organisation can operate with greater speed and lower costs.

As far as the collaboration suite is concerned, Nair feels that the value proposition of Dynamic Workplaces is relevant to a broad cross-section of industry—from large enterprises spanning multiple countries to small, fast-growing companies starting to scale up operations. “For years now, we’ve set the standards in the collaborative space. Starting with Lotus Notes and Domino, we pioneered the groupware industry,” declares Nair. Now, with products like Lotus Discovery Server for enterprise expertise management, IBM’s Lotus continues to provide its customers with solutions that enhance collaboration, learning and knowledge-sharing across organisational and geographical boundaries. “Today, collaboration means more than a set of applications. Our unique strength lies in providing solutions for contextual collaboration,” states Nair.

The company provides open, platform-independent solutions that do not bind its customers to a particular operating environment. “We understand this business intimately. We provide the most extensive and cohesively-linked range of collaborative components, along with a clear collaborative vision that emphasises enterprise-level functionality,” says Nair. “When was the last time you heard of a Notes virus?” he confidently asks. This confidence speaks volumes about the company’s capability in providing robust and secure solutions. “In a market like India, we need to continually enhance customer value through competitive, low cost-of-ownership solutions,” he comments.

CIOs and MIS managers are more concerned with the performance of a company’s product than with the vendor. While choosing a solution they consider reliability, price, performance, scalability and ease of administration more than the company’s brand value or reputation. Those who offer these features with their solution will certainly flourish.

According to Pankaj Ukay, Microsoft is basically targeting segments like banking and finance, government, ITES, and telecom for its collaborative business

Time for StarOffice?
Sun believes Microsoft’s licence changes will make its own StarOffice more attractive to businesses; it thinks it sees an opening in its battle to undercut Microsoft’s Office productivity applications. As far as StarOffice is concerned, Sun will be bundling it with PCs (from vendors) and also with Sun machines. As far as its office business is concerned, segments like government, education and SME as well as large corporates are driving it. Elaborating on StarOffice’s strengths over OfficeXP, K P Unnikrishnan, country head for marketing at Sun says, “OfficeXP’s weaknesses include cost, platform lock-in (including no Windows 95 support), bloat-ware, lack of true XML integration, new licensing models eliminating enterprise upgrade prices, proprietary file formats, not very compelling features, and forced registration.” He says that StarOffice will be addressing these issues by delivering a choice. It is a full-featured, multi-platform, low-cost office productivity suite. It provides users with open, documented XML file formats; a pathway to the future of next generation computing and wireless devices with Sun One Webtop; and unmatched compatibility with MS office files, apart from providing good savings. Unnikrishnan further states that StarOfice gives users the choice of platforms like Windows, Linux or Solaris. It also provides file filters, allowing StarOffice users to coexist with Microsoft users. But for users what is more important is not whether the software can work across various platforms (which is the conventional debate), but whether the software can solve their business problem.

Another crucial aspect which Unnikrishnan points out is that Microsoft is discontinuing support of Office versions for Windows 95, whereas StarOffice will continue to support this platform in the next version.

However, Srinivasan of Apollo Hospital has something else to say: “StarOffice is a good product. But it is obvious that Microsoft Office has its own features which cannot be immediately beaten.” Given the present economic conditions, firms are reluctant to spend money on goods and services that don’t generate revenue or address specific customer issues. Sun has also realised that cost is a very important factor for the success of its product.
According to sources in Microsoft, Office 11 (the new suite) will feature built-in support for XML to help knowledge workers more easily aggregate data from numerous sources into applications like Excel. “We do not see much competition for Microsoft. Our competitive strategy is not in terms of the amount of features we offer in Word, Powerpoint, Excel, but in terms of the ROI and employee productivity benefits,” says Karthik Padmanabhan, senior marketing manager at Microsoft India.

Today, enterprises are increasingly looking for tools which address factors like ROI and increased employee productivity. Microsoft is building value around Office to project it as a tool which addresses these issues. But a tool in isolation means nothing for the business customer. “We are seeing how an enterprise customer sees value; Microsoft is doing more work around business solutions including the Office suite keeping in mind the requirements of customers. This provides Microsoft a leading edge over its competitors like Sun’s StarOffice,” adds Padmanabhan.

The future strategy of Microsoft is to build value around their product. “We are not focused on feature-to-feature comparisons with our competitors’ products. Customers are interested in whether or not they can fix a problem, they want to know how to improve employee productivity and how to reduce costs,” he comments. Hence for the enterprise customer Microsoft is looking at providing value addition in terms of seamless integration of Microsoft tools with third party applications.

Padmanabhan also mentions that better integration, greater compatibility, and ability to work with partners and third parties are some of the advantages that give Microsoft a lead over its competitors. Some of the focus areas that Microsoft has identified for the near future include business intelligence, intranet portal applications, and work management (enterprise project management). It seems that the Office suite will be a core in all these areas of focus. Microsoft hopes to increase its share of the enterprise software market in part by making it easier for workers to tap data anytime, anywhere. This means that like in the case of Exchange, in its Office business too the company has now started focusing on the mobile user community.

The licensing issue
Microsoft expects that the changes in its open licensing programme will have a positive impact on its business. “There are various factors which contribute to success, and it is difficult to estimate the extent of the contribution of the new software assurance licensing policy. But it will definitely have a positive impact on Microsoft’s business,” feels Deepak Shagrithaya, programme manager for licensing at Microsoft India.

Grover of Oracle feels otherwise. “We will benefit from the new licensing policy of Microsoft. It will help us gain an edge over them. As part of our licensing policy for the collaboration suite we offer an AMC (which is 22 percent of the license cost) under which we automatically provide all the upgrades,” he says.

According to Microsoft, its programmes have not fundamentally changed under the new licensing policy. Under the new software assurance programme, the customer pays for the basic license. In addition to this he can also buy software assurance which is computed at 25-29 percent of the license cost per year. This will give the customer all the upgrades of the software product which are released over a period of two years. What software assurance therefore means is that by paying a certain percentage of the product cost, the customer can cover himself for product upgrades for a period of two years. “The Microsoft licensing policy with software assurance and upgrade advantage helps us to get the upgrade free for the next two years. It was not so earlier. It will save the cost of fresh licenses for organisations which are in software development. It is not so beneficial to others,” comments Srinivasan.

Nirula’s Singh however, has a different opinion. “Microsoft’s licensing policy is prohibitive. The upgrade (to higher version) cost, even with software assurance, is to the tune of 75-80 percent. Multi-user licensing is also not very supportive. The cost of licenses to load on multiple computers should be 10-15 percent from the second user onwards.”

According to Satinder Grover, Oracle aims to beat Microsoft on back-end technology, so its offering has compatibility with the existing system of the users

Again, through software assurance, Microsoft aims at making upgrades to the latest versions of software easier and simpler for the customer. “Simplicity is important for the customer and for him to be able to understand the policy,” says Shagrithaya. Generally, there are complexities involved in software licensing, especially if the software upgrade cycles are short for the customer. Regular upgrading is not an easy process. Buying regular upgrades not only turns out to be costly, but complex licensing systems also make things difficult for the customer to understand; they also become operationally difficult to manage. However, with Microsoft, it is not mandatory for the customer to go in for software assurance. The customer can choose not to opt for it, in which case the customer will wait and watch, but will have to buy the new versions and upgrades as and when they are released at full price.

“The experience in the Indian market has been that acquisition cost is also important—not just total cost of ownership. The customer does not want to lock in with a particular product for a long time,” says Shekhar Avasthy, assistant manager of software services research at IDC India. Adds Unnikrishnan, “In these economic conditions, customers should not have to upgrade their hardware to run the software. The new licensing model eliminates lower cost upgrades for enterprises.”

Contrary to the belief that the new programme keeps customers locked in to Microsoft’s products, it aims to bring in a host of advantages for the customer. One of the key benefits for the customer is cost savings. From the CIO’s and the CFO’s perspective, the licensing policy is important from the cost standpoint. “It is difficult to point out the amount of savings since the savings will differ from product to product. Taking into account the licence purchases and the rate at which upgrades were purchased in the last few years, the new licensing programme will reduce licensing costs or be cost neutral for a large number of cases. Considering the pace at which technology is changing, regular upgrading can become a very costly proposition,” says Shagrithaya. He further explains that budgeting and cash flow also become more predictable for the customer. The investment is made only once. When an upgrade comes, the customer does not have to make sudden investments for it since the investments have already been made. In addition, the customer is able to adopt the latest technologies which are coming up, and is thereby able to regularly move up the technology curve. Another important advantage is that there will be efforts towards constant improvement of its products by Microsoft. According to Shagrithaya, once customers have invested in the software along with its future upgrades, the company will have to strive for improvements and upgrades to ensure that they get value for their money and good return on investment. There may also be further improvement in terms of modes of delivery of the upgrade.

Software licensing is generally very complex because of the wide range of products. Microsoft’s new licensing policy may simplify it. Flexibility is built into the policy since the customer can choose the products and the machines for which he wants to go in for software assurance.

But not all customers of Microsoft have signed in for software assurance as yet, and the company refused to divulge the number of customers who have. According to Shagrithaya, the new programme has been more popular and has met with better success with Microsoft’s large enterprise customers than with its SME customers. This is because of the additional upfront investments involved, which is hard on SMEs since they do not have deep pockets.

From Microsoft’s viewpoint the new programme will help the company to upgrade its enterprise customers to high-end licensing programmes like the Enterprise Licensing Program. Shagrithaya believes that the new programme will have a positive impact on their various software product lines as it will make them more attractive to customers.

However the company does not see competitors like StarOffice gaining much advantage with SMEs since moving from one software to another is a very difficult process, and involves changing the entire work process, mental attitude, etc. Microsoft is also introducing more flexibility in the licensing policy for its new version of Exchange. Under this, the customer can choose to go in for both user-based and device-based licensing.

But whatever be the mindshare or marketshare that Microsoft currently enjoys, in days to come, it has to convince the user community that its new licensing policy is also going to benefit them—and not just Microsoft.