The Cutting Edge: COMPUTING / TECHNOLOGY / INNOVATION : Microsoft Entering ‘Intranet’ Arena
The Internet’s ability to let people communicate and share information with millions of others across multiple continents undoubtedly accounts for much of its appeal. But it is the more prosaic task of improving information sharing within individual companies that may ultimately account for a lot of Internet profits.
Microsoft cited these rapidly growing corporate “intranets” as a central factor in its decision, announced Tuesday, to acquire a Cambridge, Mass.-based Internet software start-up called Vermeer Technologies for a reported $130 million in Microsoft stock.
“There is a problem to be solved inside corporations [sharing information] and people are willing to pay to solve that problem,” said Chris Peters, a Microsoft vice president. Peters is in charge of a new Microsoft division that will be responsible for taking Vermeer’s FrontPage software, a product that allows nontechnical computer users to build World Wide Web sites, and building it into a mass market product.
By integrating FrontPage tightly with Microsoft’s “Office” software so that Web sites can be created as easily as documents are edited, Peters hopes to encourage many of the 17 million current users of the Office package to build their own Web pages.
The development of business applications on the Internet has been slow because of concerns over security and the lack of compelling content. But intranets--essentially small, independent Internets that operate within a company--don’t face those obstacles and thus are likely to grow faster. “The [intranet market] is the low-hanging fruit,” Peters said.
Already, the bulk of Internet software star Netscape’s sales go to corporations for use in intranets. Forrester Research, which interviewed network experts at 50 large companies, found that 20% used some form of intranet while another 40% had plans to do so.
Microsoft primed the market for intranets last month with its decision to offer much of the required Internet software for free as part of its Windows software.
“Most companies already have a network in place. All they have to do [to build an intranet] is equip desktops with Web browsers and put in Web servers,” said Paul Callahan, a Forrester analyst. “This is a real overnight phenomenon.”
Most intranets today are relatively simple. Corporations may store such basic information as employee phone books, benefits plans and internal newsletters on an intranet so they can be easily accessed by employees with Web browsers.
Others are more elaborate. AT&T;, one of the earliest and most aggressive proponents of the technology, has hundreds of thousands of employees on its intranet. Many put up family pictures and descriptions of hobbies as well as business reports on their private Web sites.
One AT&T; employee put a video clip on his site that showed a sonogram of his baby in the womb morphing into a picture of the baby at birth.
The victims of the intranet phenomenon will be companies like Novell Inc. and Lotus Development that sell costly proprietary software that help companies communicate internally.
IBM paid $3.5 billion for Lotus in large part to get access to its “Notes” program for sharing information. But developing applications on Notes requires technical know-how and a lot of computing power. IBM recently slashed it prices for Notes in response to the growth in intranets.
Microsoft’s Peters predicts employees at large corporations in the future will use their Web browsers to find the experts or corporate resources they are looking for. He said sales of FrontPage will exceed that of PowerPoint and other popular office productivity applications because in the future “this is the way people will share information around the world.”
