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. Last Updated: 07/27/2016

Microsoft Eyes Server Gold

REDMOND, Washington -- There are other things Microsoft Corp. is doing that are more glamorous than the project Rich Tong leads.


There's that alliance with Hollywood's DreamWorks studio, the all-news cable channel with NBC and high-profile Web publishing projects with journalists Linda Ellerbee and Michael Kinsley.


But none of them is as important to Microsoft as Tong's project. He leads a group of several hundred programmers developing a series of products that, marketed under the title Back Office, will run servers, the behind-the-scenes computers feeding networks of desktop or laptop machines.


They are key to the company's effort to keep growing faster than the personal computer industry.


It is becoming harder for Microsoft to grow that fast because it has hit the ceiling in two major product categories. Its Windows operating system is used on 90 percent of new personal computers and its Office suite of productivity programs holds about a 90 percent share of that market.


Unless it pushed into something new, the company's overall growth would soon just match PC sales growth, which is slower this year than last. Microsoft's most obvious opportunity is in software that runs whole networks of PCs, not just individual ones.


"It's not as easy as it used to be to get above-market growth out of Windows or out of Office,'' said Steve Ballmer, Microsoft's marketing chief. "For a variety of reasons -- A, we have lower share, B, the market is growing faster and C, there's a lot more chance to differentiate -- in the Back Office area it will be easier to grow at above-market rates if we do a good job.''


Back Office is five pieces of software, including a database program, Web publication tool and collaboration product similar to Lotus Notes. The programs are designed to run on a broader array of PCs than regular Windows, which is confined to machines powered by Intel Corp.'s chips or their clones. Back Office also works with systems based on Digital Equipment Corp.'s Alpha chip or the PowerPC chip of IBM, Apple and Motorola.


Scott Winkler, a research director at Gartner Group, calls the server software Microsoft's goldmine for the next few years. The company is now on pace to achieve $1 billion in sales in this calendar year with Back Office products, about 1/6 its overall revenue.


"By 2000, this could be a $10 billion business for Microsoft,'' Winkler said.