Microsoft's Integrated Stack Gets Higher

Microsoft CEO Steve Ballmer dropped the bombshell today in an e-mail sent to employees about the aQuantive acquisition. Looks like Online Services isn't the only Microsoft division putting on weight.

"Microsoft is announcing the move of its Server and Tools Business led by Bob Muglia from the Platform and Services Division to the Microsoft Business Division under Jeff Raikes," a Microsoft spokesperson said in an e-mail statement. "Bob's team will move intact and he will report directly to Jeff Raikes. At the same time, the Developer and Platform Evangelism team led by Sanjay Parthasarathy will move as well to the Microsoft Business Division and report to Bob Muglia."

Last week, I observed that it was strange for Raikes, president of the Business division, to announce the SQL Server "Katmai" 2008 ship schedule. However, the announcement sort of made sense, because of the increasingly deep integration along the vertical stack between desktop and server software and announcements around server-driven business intelligence. Now, it seems Raikes was running the whole show -- business applications, server software and development tools.

The reorganization is quite significant, and foreshadows much about Microsoft's 2008-2010 product release cycle. For years, I've been harping on the need for increased integration between Microsoft's productivity suite, server software and development tools. Now they're all wrapped together in one tidy organization, which should make all that integration all that much easier to do and should lead to more of it.

My diagram above takes a circular view, but the integration is really up and down the vertical desktop-to-server stack. The customer benefit, assuming Microsoft delivers on its objectives, would be greater utility and capabilities through the integration, particularly as Microsoft pushes out new stuff like business intelligence and unified communications. Microsoft benefits from sales pull: using server software to drive Office upgrades off its saturated market base and using Office's huge market share to pull new server software tools. Development tools and .Net Framework make up the glue sticking all the pieces together.

Tight integration also works as a deterrent against adoption of competing software, particularly open source. Where Linux falls short is the vertical stack. While Linux has traction on the server, it hasn't done so well on the desktop. There are simply too many missing applications up the stack and too few integrated benefits for the ones there. IBM's Linux release of Lotus Notes filled in the crucial messaging piece, but there is no viable productivity suite on the desktop.

Simply stated: There is no Linux equivalent to Microsoft Office. It's what enterprises use and manage, and most businesses' crown jewels of information are contained in Microsoft file formats. As long as most companies continue to use Office, Microsoft can pull sales to and from the server and desktop. Linux will be a non-starter there until something replaces Office. There's no challenger yet.

Developers might want to closely look at Microsoft's long-term objectives for its vertical stack. Microsoft is positioning Dynamics and Office as development platforms on its server platforms. The company's long-term objective is for developers to create vertical applications from Dynamics and Office or others that extend the Microsoft software.

This afternoon, I spoke with Colligo Networks, which has an offline SharePoint client. Microsoft would like to see more applications like Colligo's. More broadly, Microsoft expects developers to produce applications off Office and Dynamics—some tapping into server capabilities along the stack—for vertical markets, such as health care, education or financial services.

Microsoft's stack is stacking up, and the company wants developer partners to make it higher still. But is that the role you want? Please tell us by your comments.