Investments Promote Web Platform

As laid out recently by its newly titled chief software architect, Bill Gates, Microsoft is defining a platform for hosting Web-based applications that it hopes will eventually dominate that market in the same way that the Windows platform dominates the desktop. To further that end, Microsoft recently invested in two companies that host Web sites using Microsoft products. In one case, it has expended the substantial sum of US$100 million. In return for investments like these two, Microsoft gets high-profile Web sites running on its current platform and gains feedback and technology for future versions of the platform.

The two recent investments are as follows:

VerticalNet: US$100 million. VerticalNet runs a group of 55 industry-specific portal sites (e.g., SolidWaste.com for the solid waste industry) that offer industry-targeted advertising, news, job search functions, links to e-commerce sites, and Web auctions.

Microsoft agreed to use bCentral and MSN to promote VerticalNet sites. In return, it receives somewhat less than a 2% stake (at the Jan. 20 market price) in publicly held VerticalNet. For its part, VerticalNet will adopt several Microsoft products (including Windows 2000 Professional, SQL Server, and Site Server Commerce) and will also use future Web products, such as the recently announced ClearLead platform for management of customer leads and the somewhat mysterious “Next Generation Web Services” that are now Bill Gates’ main focus.