Reality Check

The .NET initiative is an exceptionally ambitious undertaking with huge potential for Microsoft. But it also represents a formidable array of challenges.

Microsoft’s future prospects—and stock price—are closely intertwined with the .NET initiative. At an absolute minimum, Microsoft must make sure .NET preserves existing desktop operating system (OS) and application revenue streams and fuels significant annual increases in server OS and server application sales. It must use .NET technologies to fend off desktop competitors (e.g., Java, Linux, and StarOffice) and provide existing customers with compelling reasons to upgrade their desktops. And the company must do everything in its power to make corporate IT professionals feel comfortable running their Web sites and other custom server-based code within the .NET Framework, powered, of course, by Microsoft-based servers. Microsoft also hopes to use .NET to fuel new sources of revenue—e.g., subscription-based services such as Hailstorm, MSN premium services, and bCentral.