The .Net Mystique

"It was a one-way relationship," says Bill Rourke, president of Salentica.

"We had a channel-sales representative who flat out told us not to call her or bother her."

And so, Salentica took a new course. Rourke and his team remade the company as an ISV and developed its own CRM solutions to complement the market-leading applications. Then, a new question presented itself. Which applications--and more important, which application-development environment--should Salentica build its solutions for? Rourke wasn't sure--until he heard that Microsoft was readying a new CRM product. Taking a chance, he called the software giant, which was more than happy to bring Salentica aboard.

"Microsoft was different," Rourke says. "It really wanted to drive business with us."

As a result, Salentica began working with beta versions of Microsoft CRM, and soon tied its analytics applications and CRM tracking program, dubbed iParties, to complement the new product. Now, Salentica has a solid vendor partner and a hot, new product on which to build its ISV business. But what about the future? Microsoft offers a dominant software platform in Windows and market opportunities, but it--like many leading software companies--has often teamed with smaller ISVs in the early stages of a product only to end up competing with those ISVs as the products mature.

"You've got to go in with your eyes open, and you have to pick your spots," Rourke says. "We know this is a short-term business opportunity for us. At some point, Microsoft is going to add functionality and round out its offering."

Environment Science
The Microsoft specter looms large in the application-development space; it offers untold treasures and countless perils.

Jonathan Christensen, vice president of products and CTO at FaceTime Communications, previously worked at Microsoft for several years. He served as a program manager and developer on Microsoft's Real-Time Communications project as well as "Greenwich," the code-named product for enterprise instant messaging. Christensen says he spent much of his time working on Microsoft APIs in an effort to bring the Windows environment into the data-networking market to a greater degree.

At FaceTime, Christensen has gone from being a Microsoft advocate to an impartial software developer looking for the best course for his company.

"My role is different now. Instead of championing a platform, I'm trying to choose one," he says.

That decision, he says, is for Java. It may seem odd for a CTO of a growing ISV to choose Java after spending so many years developing software for Microsoft, but Christensen makes a sound case: "It gives us the flexibility to run on Windows and other environments," Christensen says. "It's a mature market, it's got good tools, and there's a lot of momentum in the Java community."

Still, FaceTime is building applications for the Windows environment and .Net in addition to Java. For example, the software vendor has instant-messaging applications, such as IM Presence and IM Guardian, for both IBM Lotus and Microsoft Exchange. Christensen describes his company's Microsoft-related business as both lucrative and a constant challenge.

"You're always playing a game by writing applications around Microsoft and Windows because you have to convince customers that your solution isn't offered by Microsoft already and won't be offered down the road," Christensen says.

Working with competing environments and standards can be expensive and time-consuming, Christensen says, but it's an all-important advantage for ISVs looking to broaden their horizons and hedge their bets. "It's worth the pain to address the different programming languages and be heterogeneous," Christensen says.

Bill Cook, vice president of U.S. sales at Sun Microsystems, says Windows is still the dominant force in the small and midsize business market, but Java, Unix, Linux and others are making inroads against Microsoft.

"The ISVs aren't writing applications to the operating systems anymore," Cook says. "They're building apps at a higher level for open platforms."

More often than not, however, ISVs and solution providers are finding Microsoft's presence, especially in the SMB market, too potent to ignore completely. And while many ISVs have adopted Java, for example, the door isn't shut for Microsoft. "We're going with Java," Christensen says slyly, "but it doesn't mean we won't change our mind down the road."

Vertical Visions
One advantage that ISVs have in the Microsoft application-development world is the vertical solutions path. Salentica Systems, for one, believes this is the company's saving grace concerning its Microsoft partnership.

"We know that iParties-type features will be added to Microsoft CRM eventually, but we have vertical solutions, too," Rourke says. "Microsoft has traditionally been horizontally focused."

Salentica, therefore, can fall back on its vertically focused analytics suite when Microsoft CRM version 3.0 arrives with tracking functionality, such as Salentica's iParties. But that's a few years away, Rourke says.

"Microsoft CRM is good, but it's a work in progress," he says. "It's an upfront investment for marketing and developing the add-on solutions, but we've got some clients now, and it's beginning to pay off."

How vertical can ISVs and solution providers go? Quite far, according to Christensen, who was at a recent trade show in Geneva where he met a horticulturalist who built applications that cataloged various types of trees. Christensen says the man tried to convince him that Microsoft absolutely needed to build a tree-cataloging software tool immediately in order to corner the market. "That's how out of control the vertical-application business can get," Christensen says.

There are other areas with potential in the Microsoft world. George LaVenture, president of Trinity Consulting, a Microsoft Gold Certified Partner based in Marlborough, Mass., focuses on infrastructure and knowledge-management solutions. A Microsoft-certified engineer and solution developer, LaVenture says there's plenty of software-development opportunities for security add-ons and solutions for Microsoft, which has a poor reputation for security.

"Microsoft has refocused on quality software development--read the word 'security,' if you will," LaVenture says. "They've got to shake out the bugs from previous versions of Windows, and the insecure nature of the software presents a lot of work for us."

Still, LaVenture says the software giant has launched a well-organized campaign to build up application development with solution providers and ISVs from Business Solutions to .Net. And LaVenture says he's betting his business on a software platform that he knows will be around in 10 years.

"In the past year, Microsoft has really returned to its roots by helping partners better market their businesses around its software," LaVenture says. "Microsoft has gone out of its way to provide the development tools, training and education for the channel."

While Trinity is a die-hard Microsoft shop, LaVenture says competing software such as Java and Linux benefits the overall market. "Competition is good because it keeps all of us on our toes looking to move to the next level," he says. "You're always going to have a polarization of environments and standards, just like Republicans and Democrats in politics."

Christensen also believes the rise of new programming languages around Web services and open source will ultimately benefit the software-development community by presenting more options and, in some cases, better connectivity for many ISVs.

"I'm relatively encouraged by the progress that alternative software and smaller platforms have made in the market," Christensen says. "I think we're moving away from a natural monopoly around Windows."

Microsoft will still be the top software environment for the future, however, and with tens of billions of dollars in the bank and a renewed commitment to research and development, the software company is in a position to strengthen its application-development business in more ways than one.

"They're either waiting for the right time to buy a lot of those ISVs, or they're going to funnel a lot of those billions in the bank back into R&D," LaVenture says. "Or both."

What To Consider
So, you want to develop apps for Microsoft?

The Pros:
Applicability: With a 90 percent-plus market share on the desktop, solution providers and ISVs know their software will have a home if tailored for Microsoft.
Training: Microsoft ISVs and VARs will never have a shortage of training, certification and education resources; the software giant outranks every vendor in such areas.

The Cons:
Competition: Writing applications for the Windows and .Net environments may lead to competition with Microsoft, as the company has been acquiring application vendors and adding new products such as CRM programs.
Compatibility: Most customers have a heterogeneous environment and a mixture of software languages and standards, including Java and Linux, so focusing on Windows, which doesn't play nicely with other platforms, can paint ISVs and solution providers into a corner.