Internet allows Microsoft to spread its net ever wider

There are so many divisions at computer giant Microsoft right now that it can be hard to keep track - even if you're Robert Herbold, the company's chief operating officer.

Take, for example, the 25 per cent of US new car buyers who access the Internet before deciding on a purchase. Microsoft offers them MSN Carpoint which realises $600 million (€556 million) in car revenue per month and has 2,400 car dealers.

It has MSNBC, the cable news channel which, Mr Herbold says, changes the way people get information on television and has seen its audience quintuple to nine million in two years. Then there is MSN, the portal on the Web, MoneyCentral for trading online, Microsoft Money for banking online, Expedia for checking out hotels online and MSN HomeAdvisor for finding a home online. Microsoft also recently acquired CompareNet, an interactive buyers' guide, to improve the process of searching and comparing products online.

"The Internet is impacting virtually every industry," says Mr Herbold. "There is huge potential for new consumer benefits."

He was speaking in Las Vegas last week at FinNet, Microsoft's annual Internet Financial Services conference, where he outlined Microsoft's Internet strategy.

Mr Herbold is a member of the business leadership team at Microsoft and he, along with Microsoft president Mr Steven Ballmer, directly report to Bill Gates, chairman and chief executive officer.

Microsoft's Irish operations also report to Mr Herbold. He has responsibility for the research and development facility, European data centre and manufacturing operations at Sandyford Industrial Estate in Dublin where products are localised for Europe and the Middle East.

In a one-to-one interview after his opening address, Mr Herbold said he was "pleased with the continuing dialogue with the Irish Government". He had discussions with the Tanaiste, Ms Harney, as recently as six weeks ago.

Microsoft has played a role in the campaign for the deregulation of the Irish telecoms market. Mr Herbold said he met with senior Irish representatives nine months ago to discuss the technical implications of telecommunications converging with the Internet. Telecom's proposed flotation, said Mr Herbold, "is good for Irish consumers".

FinNet 99 was a good occasion for Microsoft to talk about the role it is playing in financial services as it coincided with several significant announcements.

Microsoft can now claim to have signed 300 financial institutions for Internet banking. Five years ago Microsoft was primarily a desktop company, said Mr Herbold, but today its emerging strength is in the back office with banks installing software, Windows NT and SQL servers.

"It's a big number and growing fast," he said. Microsoft now supplies 55 per cent to 65per cent of bank branches in the US, 85 per cent of bank branches in Europe, 55 per cent of the branch market in Russia and 20 out of 27 banks in Mexico. "We're making rapid progress at this junction," Mr Herbold said.

This will obviously affect IBM which, he said, has traditionally been "a strong player" in the financial services sector.

"The key message is that Microsoft is probably in the strongest position of any vendor in that it can provide a complete solution to customers," Mr Herbold maintained. "Our strategy on the Internet is intended to provide consumers, via software, with the ability to do things in a faster, simpler way. The Internet is core to everything we do. It truly represents global connectivity."

In comparing how technologies have changed, he said, in 1975, the basic microprocessor could send 250,000 instructions per second at a cost of $10,000. Today, it costs $2 to send 350 million instructions a second and fibre optic wire has increased its rate of capacity by 40 per cent a year since 1990.

Clearly, he said, entire industries related to the consumer experience are being re-engineered for low-cost, faster service and improved customer satisfaction. This premise is true whether it is happening in the automobile, retailing or financial services industries.

Microsoft is touting itself as having the platforms on which customers and partners can build applications.

One of the products Microsoft will be releasing soon is Passport, a wallet-type service for one-click shopping on the Internet. "The intent is that everyone can use it," said Mr Herbold. It is specifically intended for consumers to input their personal details once and then transport the Passport to various websites where they wish to shop, without having to re-type passwords or re-enter information.

Transpoint, a joint venture between Microsoft and First Data Corp and Citigroup, has now gone live. After two years in the making, Transpoint's Internet bill delivery and payment system is up and running in Denver, Colorado. It has signed a total of 14 banks and 48 billers to use the service.

"This is a significant time for us," said Mr Lewis Levin, president and chief executive officer of Transpoint. "We're not in pilot anymore. We're live and in a fundamentally stable position."

He said putting in place a complete infrastructure for bill payment "was hard work. We built it from scratch because nothing else existed that could do what we wanted to do".

Mr Levin estimated bill delivery is a $12 billion opportunity with 15 billion bills written annually in the United States and 28,000 monthly recurring billers.

"The real benefit of a bill for many billers is that it is the primary form of customer contact," said Mr Levin. "Billing is a way in to a complete strategy for Internet-based customer service. Transpoint is charging after the bill delivery business."

With the average American household paying 13 bills a month, Mr Levin said, "if we could do presentment for 10 of those bills, I believe we have delivered something that is terribly convenient".

Another Microsoft initiative is Biztalk, its business server framework announced in March, which allows different pieces of software to work together. The difference between it and Electronic Data Interchange (EDI) is that different companies write EDI standards differently and so there is little connection. Biztalk, on the other hand, "is designed to take protocols in one industry and clip them together easily into another, just like lego blocks", Mr Herbold said. "We're so bullish on Biztalk."

The problem with EDI in Europe, he said, is that it is based on leased lines from multiple telephone companies. BizTalk, he believes, can overcome the frustration of doing business the EDI way.

Sainsbury, the British retailer, and food firm Nestle, "got frustrated with the EDI process", said Mr Herbold. So they replaced EDI with an Internet system to share information and forecast product supplies. Now Sainsbury is taking individual store data on an hourly basis and passing it on to Nestle so it can keep lower inventory.

One of the "hottest applications" Mr Herbold believes, is corporate purchasing over the Internet, when businesses opt to buy all their office supplies from the desktop. About 64 per cent of corporate purchasing deployments, he said, are built on Windows NT.