'India is a market where we're placing significant emphasis' - Jonathan Murray, Director, Strategic Enterprise Sales, Microsoft.

-Jonathan Murray, Director,

Strategic Enterprise Sales, Microsoft.

width="198" height="297" align="right">With a view to tap the increasing power of the web,

Microsoft recently announced a comprehensive ecommerce strategy. The plan is designed to

make it easier for businesses and consumers to conduct business over the net. Jonathan

Murray, Director, Strategic Enterprise Sales, Microsoft, is charged with communicating

Microsoft's enterprise product strategy and taking customer feedback about the company's

product directions. He was responsible for the design and implementation of client server

infrastructure projects, including enterprise-wide messaging and groupware applications.

Murray, who is also actively involved in the key strategic initiative for ecommerce, spoke

to DATAQUEST about Microsoft's ecommerce strategy. Excerpts:

These days one gets to hear a lot about Microsoft's ecommerce initiatives. What has
prompted this shift?




We've actually had a fairly robust ecommerce solution for customers since last couple

of years. About three years ago, we came out with SiteServer, which is the foundation of

our ecommerce strategy. We've had a lot of success with our customers and 15 of the top 25

commerce web sites today run Microsoft technology. There have been companies like Barnes

and Nobles, 1800-Flowers, The Gap and Dell Computers, which have been very successful. But

we've probably not been looking at the marketing perspective. This is really unusual for

Microsoft. We've not been vocal about something that is actually a very big success.

But the perception about

Microsoft is primarily that of a 'products' company. So, what's the strategy here, given

that there is more concept selling and consulting involved in ecommerce?



We are not in the consulting business. Let me explain that our strategy has always

been to build a platform, which is successful when the customers run the applications on

it. There is a three-way relationship: Microsoft, a set of partners who will do

consulting, and the customer. This strategy doesn't change with ecommerce, though one

thing different can be that we can leverage some of our experience in building web

services. For instance, the MSN (Microsoft Network) service has a lot of brand equity and

attracts a lot of consumers. This can provide a link to our customers so that they can

build a retail channel and promote their service offerings. But this is not really a

consulting service. We're going to work closely with Arthur Andersen, KPMG and PwC around

the world to help customers implement this technology.

How do these ecommerce

initiatives fit in with Microsoft's overall strategy?



We are in the business of building better technologies that let customers build their
business and be successful. We offer client technology that help people inside the

organization analyze information and produce new products, a backoffice server technology

on Windows NT and a very broad range of ISP packaged applications. And e-commerce is a

logical extension of the infrastructure that we've been very successfully selling. So, we

are going to look at it to reach a broader range of consumers through the internet. To

that extent, we're extending the platform that we have to help customers leverage on these

new opportunities.

Microsoft has been promoting the

concept of internet commerce. Isn't it a subset of ecommerce itself?



You are right when you say that ecommerce includes a wide range of applications, but

you can't think of it in any other way than connecting it with the internet phenomenon,

because that is the primary infrastructure or the fuel that is firing the ecommerce

growth. All commerce applications today are based on internet as a foundation. And here

I'd like to point out that even EDI, which is basically based on proprietary value-added

networks, is moving to internet as a carrier for EDI transactions. In fact, the reason why

EDI hasn't been very successful is the great deal of complexity involved in connecting the

applications and, of course, the cost involved.

Where does 'open marketplace'

fit in here?



Well, the 'open marketplace' refers to MSN. It is actually a unique opportunity for small
businesses. Large enterprises have lots of money to invest in IT. They can easily develop

their ecommerce capabilities and be successful on the web. But if you are a small

organization without IT people, it is a real challenge. So, by allowing them to connect to

the web through MSN, we act as a broker to the advantage of both.






The consumer gets a broader range of service offerings and the business enterprise gets an
opportunity to showcase its offerings to a larger installed base of consumers.

You are emphasizing on ecommerce

as an opportunity for small businesses, but isn't it the bigger brand that ultimately

grabs the major marketshare...



I don't believe that is true. Although we are targeting both kinds of businesses, we also
believe that there is a big opportunity for the small businesses. They are the ones for

whom it is a challenge to get on the web today. All of them provide niche offerings that

are locally based and consumers find this attractive because they can have a one-to-one

relationship. This isn't like the big size market where the big players necessarily

squeeze out the small players. The market has just started expanding and I don't think

we've even seen the tip of the iceberg in terms of how big this market can become.

BizTalk is touted as the new

common language for ecommerce. What is this supposed to mean? Will it enable Microsoft to

penetrate the small business segment more easily?



It is based on XML, which is an open industry standard. And BizTalk tackles a couple of
problems. You can connect one application at one end of the supply chain to another

completely different application at the other end of the supply chain, using XML as a

transformation format. Let's take a large organization running SAP for supply chain

management talking to a small supplier who may be running another package for its

financial applications and the two packages have a completely different concept of

invoices, purchase orders or the product lines. What the BizTalk server is designed to do

through XML is to allow you to map the concept of an invoice in SAP to another package and

therefore allow those businesses to exchange information to build an online relationship.

We are developing a set of server technologies that will be integrated with our small

business server, so that they will be able to integrate themselves easily with

infrastructures of large organizations. And MSN will also be BizTalk-enabled.

What factors, according to you,

will play a major role in driving the growth of ecommerce?



With global deregulation and availability of networking, there would be a new phase of
ecommerce globalization. Today, commerce is defined by borders. There are some global

sites like amazon and barnes&noble, but even their target audience is North America.

The main thing that is driving ecommerce is obviously the growth of the internet. Combined

with that is the deep penetration into the home market, particularly in North America.

These days, it is very difficult to think of a PC without an internet connection. And that

creates a market, so it has really reached a critical mass to the point where there are

enough consumers to enable companies to make the investment in internet commerce

technologies.

But don't you think there are

many legal issues that act as inhibitors?



Yes, there are transnational taxation issues and cross-border payment systems. I think
these are some of the impediments in the way. But I believe governments will ultimately be

dragged to deal with this.

What is critical to becoming a

success on the web?



The key to success on the web today is identifying your product niche, getting exposure in
terms of being able to promote your products in getting visibility to the consumer. This

is getting tougher and tougher on the web today. There aren't many sites that are making

money on the web today. So, one of the challenges is that you still have to look at the

business fundamentals. If someone comes to your site and purchases a product, even if that

transaction cost is very low compared to a physical transaction, you still have to manage

the inventory, shipping and distribution. And this is where, quite often, ecommerce

companies go wrong. They get focused on what service they need to offer on the web and

miss the fact that they've got to run this physical infrastructure at the back end. You've

got to pay attention to both these aspects.

What is your opinion on India's

adoption of ecommerce? Is Microsoft looking at India as a potential market?



The Indian market is very advanced in a whole range of areas in the IT sector. But

there are clearly infrastructure issues such as deregulation of the telecom market or

availability of networking at a managed cost. With PC prices coming down, PC penetration

in the consumer market in India is growing significantly. That's creating a consumer base,

but unless you can connect those consumers to businesses, the virtual cycle is never going

to get started. I don't think the government is very focused on that. But I am very

hopeful that once the basic issues get tackled, ecommerce will explode in India in much

the same way as the rest of the world.






There are three main markets that we're focusing on: India, Brazil and China. And in
these, Brazil's economy is not doing very well. In China, the piracy rate is as high as

95%. So, India is a market where we're placing significant emphasis. Although the piracy

rate is also high here, you have such an educated workforce and a desire to be globally

competitive. When you have such a desire and the intellectual capacity, the industry will

become successful once the system infrastructure issues are addressed.