Application development is quickly moving away from "roll your own" infrastructure technologies toward packaged application servers that encapsulate current best practices in application development. The upcoming release of Windows Server 2003 marks Microsoft’s formal entry into the application server market, which is currently occupied by two major competitors: BEA WebLogic and IBM WebSphere Application Server. Although, unlike competing products, Microsoft's Windows Server 2003 isn't explicitly packaged and labeled as an "application server," Windows Server 2003 does provide a complete set of core application server functions built in, at no additional cost. Corporate IT planners looking to accelerate application development should include Windows Server 2003 on their evaluation list, especially considering the strength of Microsoft's Visual Studio .NET development tools.

Application servers are software platforms that simplify the development, deployment, and maintenance of large-scale multiuser applications, such as corporate payroll or benefits systems or high-volume e-commerce Web sites. The application server technologies included in Windows Server 2003 are not new; they build on COM-based technologies already present in Windows NT 4.0 and Windows 2000, and on the .NET development platform released in early 2002. What is new is the fact that these features are now included in every copy of Microsoft’s server operating system (OS) and that the company is marketing and positioning Windows Server 2003 as an application server. In addition, Windows Server 2003 includes support for Web services—an emerging technology for integrating applications via XML.

Microsoft has two big motivations for entering the application server business. First, if Microsoft is able to make significant inroads in the application server market with Windows Server 2003, it is likely to also increase sales of accompanying products such as SQL Server, Exchange, BizTalk, Application Center, and Microsoft Operations Manager. Second, because other application servers weaken the dependency between corporate applications and the underlying OS, they risk commoditizing Microsoft’s Windows business. The combination of significant upside potential and a threat to its server OS business makes it impossible for Microsoft to ignore the application server market.

Application Servers Fill Key Role

Application servers benefit companies by reducing the amount of infrastructure code (e.g., transaction processing, message queuing, load balancing) that developers must write, thereby allowing them to focus instead on the specific business problems being solved. The application server provides an infrastructure that enhances application scalability, reliability, and maintainability.

While application servers have many benefits, they do not automatically "fix" existing applications. To gain the benefits of an application server, developers must write code specifically designed to run under the control of the application server, which limits their use to cases in which a new application is being developed or an existing one is undergoing a major update.

In addition, application servers are designed to address the needs of applications that must serve many simultaneous clients—either people or other applications and systems. Any competent developer is capable of building an application that effectively handles three simultaneous clients without the aid of an application server. Simultaneously serving 3,000 or 30,000, however, is a very different matter.

For example, an expense-report tracking application is likely to be simultaneously used by many users as employees enter new reports, managers view and approve reports, and payroll systems make payments. For an application with even more users, consider the online order processing applications used by companies such as Amazon.com or Dell, which must support potentially tens of thousands of users as they enter sales, customize orders, make purchases, and track order processing and shipment. In fact, Amazon.com originally developed its site without the aid of an application server, but eventually abandoned its "home-grown" approach in favor of BEA WebLogic.

Windows Server 2003 as an Application Server

IT planners looking to adopt an application server should add Windows Server 2003 to the list of products being evaluated. Windows Server 2003 provides the core features required for an application server, such as coordinating transactions, message queuing, and component and application pooling, and it is a credible alternative to products such as WebLogic and WebSphere.

A Key Advantage: Visual Studio

In addition to being competitive across the range of core application server features, Windows Server 2003 has a significant advantage over competing products: Visual Studio .NET (VS.NET). Although not strictly part of Windows Server 2003, VS.NET is Microsoft’s flagship development tool. It was designed specifically to take advantage of the application server functionality in Windows Server 2003, and it builds on the company’s history of success in the development tool space.

In addition, Microsoft has cultivated a significant third-party community that provides products that complement VS.NET, including support for additional programming languages such as COBOL.

Major Shift for Existing Customers

Microsoft customers who are currently using the application server features already included in Windows NT 4.0 and Windows 2000 will find that they need to make a major technical shift—from the previous COM-based technology to the new .NET development platform—with Windows Server 2003.

These customers face a decision different from those considering an application server for the first time. Because Microsoft has made it clear that .NET is its strategic direction for the future, customers using Windows 2000 and COM-based application server features must decide when and how to move to Windows Server 2003 and the .NET development platform. The move can be done in stages: Windows 2000 applications that use Active Server Pages (ASP), for example, can be moved to ASP.NET in a fairly straightforward manner and gain immediate benefits in terms of maintainability, reliability, and ease of future development, while leaving the bulk of the business logic unchanged. (For detailed technical information on the .NET development platform, see the Feb. 2002 Research Report, "The .NET Development Platform.")

Web Services: An Emerging Requirement

IT planners trying to make decisions about application servers must also take into account the emerging role of Web services. While not yet a core application server requirement, Web services improve interapplication communication with widely accepted protocols, such as Hypertext Transfer Protocol (HTTP), XML, and Simple Object Access Protocol (SOAP). Because application servers simplify application development, customers that use them are likely to build more applications in less time, and are therefore likely to have more applications that would benefit from integration.

IBM and Microsoft are the leading proponents of Web services, are joint authors of many of the industry standards on which Web services are built, and therefore are furthest along in providing Web services capabilities. For example, in addition to integrating with Microsoft’s application server technologies, VS.NET provides significant support for building and using Web services from within applications.

Although they have so far been limited to pilot projects and other experimentation, Web services are likely to be an important means of integrating applications. Organizations that see a role for Web services in their future development should expect their application server vendors to articulate a comprehensive Web services strategy and should look for them to begin to deliver on that strategy.

Application Servers Support Microsoft Server Push

Microsoft’s entry into the application server market is of importance not only to customers but to the company as well. Success in the application server market means additional sales of related products and would fend off the threat to its OS business posed by Java-based application servers.

Potential Pull-Through of Other Products

Application servers are not purchased in isolation. Once an organization standardizes on a particular application server, it is unlikely to introduce other application servers into the mix. In addition, once an organization has standardized on and deployed an application server, other server products are judged, at least in part, on how well they integrate with that application server. This tends to lead to additional software sales for the vendor that wins the original application server sale. For this reason, Microsoft believes that if Windows Server 2003 gains widespread adoption in the application server market, the company stands to gain additional revenue from sales of related products, such as SQL Server (Microsoft’s database product), Exchange (for e-mail and collaboration), BizTalk Server (which aids application integration via XML), Application Center (for running applications across clusters of computers), and Microsoft Operations Manager (for monitoring performance of servers and server applications).

Growing server sales is important because Microsoft’s server business has the potential to become the "third pillar" of profits for the company. While both the desktop OS and desktop application businesses face difficult growth prospects due to the slowing PC sales and Microsoft's already-dominant market share positions, the market for servers remains strong and the company’s market share in servers is nowhere near as high as its desktop business. In addition, the server business is already profitable (unlike many of Microsoft’s other forays), so additional revenue translates directly to additional profits.

Threat to OS Businesses

Because applications servers sit on top of existing server OSs and offer their own APIs for developers to use in building applications, they lessen a company’s direct dependence upon the underlying OS. In addition, both of the major competing application servers are based upon Sun Microsystems’ cross-platform Java, a technology that Microsoft has previously considered a very serious threat. If a corporate 401(k) enrollment application is developed using IBM’s WebSphere on Windows, for instance, it should require only minor changes to run with the Linux version of WebSphere.

In addition, competing application servers strongly promote either Web browsers, which are available on all modern OSs, or cross-platform Java clients, which does little to promote or encourage additional desktop OS sales. Therefore, if a customer standardizes on a Java-based application server, Microsoft not only runs the risk of having its server OS commoditized but it also risks having its desktop OS commoditized as little more than a "dumb" terminal for running a Web browser or Java client.

Microsoft Using Well-Tested Strategy

In deciding how to compete with established vendors such as BEA and IBM, Microsoft is relying on a strategy that served it well when it was competing with companies like Banyan and Novell in the networking market.

First, Microsoft is including application server functionality directly in its high-volume server OS. As desktop applications became more sophisticated, the company argues, features that were once considered to be additional functionality, such as networking protocols and file and print sharing, became core features of a desktop OS. By pursuing a similar path in the application server market, Microsoft hopes to make cost arguments in favor of Windows Server 2003. Because application server components are bundled into the OS, a Microsoft application server is less expensive than either WebLogic or WebSphere running on Windows, but BEA and IBM both produce versions of their products that run on OSs such as Linux, potentially negating any Microsoft price advantage.

Second, Microsoft is building on its considerable strength in developer tools to make it as easy as possible for millions of Visual Basic (VB) developers to build applications that run on Microsoft’s Windows Server 2003 application server.

What’s Coming in This Report

The remainder of this report is devoted to an analysis of how Windows Server 2003 fills the role of an application server.

What is an application server? Because the entire application server market is nascent, this section covers the generic benefits of application servers, the three core functions they perform (hosting components, connecting to data, and supporting user interfaces), and the most important differences between the major vendors' approaches. An accompanying sidebar explains the component-based, three-tier programming model (e.g., user interface, business rules, and data storage and retrieval tiers) used by nearly all application servers.

Hosting components. The report next discusses how Windows Server 2003 supports component-based programming—a programming model that increases software reuse—and frees developers from having to write code to provide services such as message queuing and pooling.

Connecting to data. Because almost all corporate applications involve a database of some sort, application servers must facilitate and coordinate applications as they access data. The report discusses how Windows Server 2003 provides access to data from a wide variety of database management systems and how it works to ensure that applications correctly update those databases.

Supporting user interfaces. This section of the report explains how Windows Server 2003 supports both thin-client and thick-client user interfaces and the new features designed for each.

Benefits and Prospects. Finally, the report examines the strengths and weaknesses of Microsoft's Application Server technology and the company's prospects for success in this market.

Rewritten IIS anchors Windows Server 2003. An appendix gives technical details on the new version of Internet Information Services (IIS) included in Windows Server 2003, on which ASP.NET relies.