.Net Growth Questioned

Open-source adoption rate appears faster, critics say.

Microsoft Corp. says the .Net platform is sprouting its own ecosystem and undergoing substantial adoption, but critics say .Net is still not nearly as popular with developers as open-source tools are.

If investors are any indication, more funding now appears aimed at open-source technology than at .Net-based startups. In fact, one venture capital firm run by a group of former Microsoft executives has cast a wary eye on investing in .Net-based companies.

Brad Silverberg, managing partner of Ignition, a Bellevue, Wash., venture capital firm that also employs ex-Microsoft executives John Connors, former chief financial officer and CIO; Richard Tong; Cameron Myhrvold; Richard Fade; Jonathan Roberts; John Ludwig; and Carolyn Duffy, said he thinks the jury is still out on .Net. Silverberg, who was a senior vice president at Microsoft and helped build the Windows franchise, including overseeing the launch of Windows 95, leading the companys early Internet efforts and leading the Office division, said: "I think .Net is still nascent in the market. And if .Net presents a good opportunity for investment, we will certainly invest. We havent made any specific .Net investments."

However, Ignition has made investments in open-source startups, including SourceLabs Inc., a Seattle company focused on delivering services around integrated open-source software for enterprise customers.

"Were technology-agnostic here," Silverberg said. "So we do make investments in proprietary software companies, and we make investments in open source. And its clear that open source presents a tremendous opportunity for people to invest."

Silverberg said he sees a few questions Microsoft, of Redmond, Wash., has yet to answer regarding .Net. "One of the questions that Microsoft faces as they roll out .Net is How do other people make money investing in .Net?" Silverberg said. "And these are tough questions. When we developed the Windows platform in the 90s, one of the keystone principles was we make money by helping other people make money-that our success was a byproduct of other peoples success. Now I think there are legitimate questions in the software development community about investing in .Net."

Mike Sax, founder of Sax Software Corp., in Eugene, Ore., which makes components for Windows developers, said, "Adoption has been slower than expected, for sure. I personally believe thats because, for developers, .Net is more revolution than evolution."

"People do not believe that the adoption of smart clients is going to take off," said an official with one ISV backing the .Net platform, who requested anonymity. "They dont believe Microsoft publishes the right numbers about .Net adoption."

Microsoft maintains that .Net adoption is on track with the companys expectations. At the Microsoft TechEd conference last month, Microsoft CEO Steve Ballmer said: "Ive got to start with .Net. Weve been in the market now five years with .Net. The primary development tool of choice for 43 percent of all developers is .Net-based. Java is No. 2 at 35 percent. And frankly, Win32 non-.Net is No. 3. So theres really been an embrace amongst developers for .Net."

Mary Jo Foley, of Microsoft Watch, contributed to this story.