Software as a Service? Microsoft Puts its Money Where its Mouth is

Microsoft is partnering with Compaq Computer Corp. and Digex Inc. to deliver systems, software, and services for application service providers (ASPs) and large Internet businesses.

In the announcement made today, Microsoft ( and Compaq ( are investing $50 million each in to Digex ( in return for Digex stock, as well as to fund the deployment of these new Internet services.

"What were really talking about is a powerful alliance that draws on the strengths of these three companies," said Keith McAuliffe, vice president of the Compaq service provider business, in a press conference today. "By enabling service providers with the ability to deploy applications rapidly, we provide a safe, secure way to meet their needs."

The companies will be working on a Digex-branded, managed platform focused on implementations of ASP solutions. Goals will be to provide "dial-tone" availability to these services, while designing platforms that scale for the growth of online services in the future. The service will also provide up-to-date, actionable data via standardized XML interfaces to the organization's order, incident tracking, security and billing status information.

Mark Shull, CEO of Digex, says the number of ASPs is growing dramatically. "What they're doing is trying to transition their software from the client/server model to the network model. They're also trying to make it a rent model to allow [organizations] to rent applications on a user basis," Shull explains. "As they transform their business, we'll be providing a well-documented platform to launch those applications. We'll have standard ways of monitoring that information and managing it."

Microsoft and Digex will work cooperatively to develop software interfaces which are expected to allow Windows developers to more easily build "ASP ready" functionality such as online provisioning, billing and incident tracking into their applications. The companies forecast this to result in building the following components:

  • ASP Server Platform -- This component will advance automated provisioning and configuration of Internet-ready servers based on Microsoft Windows 2000 and Compaq enterprise-class servers, advancements in server resource monitoring and data management for improved reliability and recovery, and integrated administration and security tools.
  • ASP Application Platforms -- These will include hardened, tested, version-controlled, software packaging based on Microsoft technology and designed specifically for commerce, messaging, and office applications, for use on top of the ASP Server Platform.
  • ASP Partner Interfaces -- These standardized software interfaces, leveraging the XML and BizTalk frameworks of the Windows DNA platform, will allow sharing of critical business and server resource information to enable an ASP with up-to-date, actionable information, to become a "one-stop shop" providing their customers with a single-point of contact. This will provide an easy mechanism for Microsoft ISVs and application developers to ASP-enable their applications.
  • ASP Solution Certification -- A laboratory planned for development at the Digex center in Beltsville, Md, will be used to continuously optimize, tune and test ASP solutions for scalability, security and performance on the Internet.

Compaq will provide and test its ProLiant Servers and StorageWorks systems to be optimized for the Digex platform. This way an ASP buying into the platform will have hardware that's already been tested and approved.

Thomas Koll, vice president of Microsoft's network solutions group, says Microsoft isn't balking at the revolution of Internet-based software, but embracing it. "Software as a service is a new environment in a market we have to address," he explains. "Nothing should change for the users. They should get the same applications and richness on the client [as they do] in the PC environment."

The partnership will have significant implications for businesses moving towards the ASP model, says Martin Marshall, director for Zona Research Inc. ( "The lesson is that a hundred million dollars, or even a few hundred million dollars, is small potatoes compared to the stakes of proving out Windows software and Intel hardware in the ASP market," Marshall reports. "Digex already has established a relationship with Sun to achieve SunTone certification and will now sit astride dueling efforts between Sun and Microsoft, profiting whenever either wins."

Marshall further explains that the ASP market is wide open for technology influence and market share so Compaq is not only hoping to more aptly compete with Sun Microsystems Inc. (, but also Hewlett-Packard Co. ( who's maneuvering both its Intel-based and HP-UX servers inside the ASP data center. -- Brian Ploskina

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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