To the Editor:

A Nov. 7 article ("Microsoft's Byte Has Teeth, Research Firm Says," page 15) addressed a Forrester Research report that predicts that Microsoft's strategy will falter when it strays too far from its core competencies. Further, the report suggests that the MSFDC partnership for electronic bill processing will likely stumble.

There have been, and will continue to be, many oscillations among many different companies as electronic commerce evolves. But the processing of information is one of Microsoft's core competencies. Another core competency of theirs is to capitalize on opportunities originated by others' failures.

Coincidentally, in another American Banker article the same day ("From Two Sides, Leaders Agree M&A Mania Intensifying," page 1), Kenneth D. Lewis, president of NationsBank, summed up the basic issue when he said, "Banks must embrace change or fail. Banking is essential to the economy. Banks are not."

If information is the essential product that banks offer, they may be well on the way to designing their own extinction. In recent years, the trend has been toward the outsourcing of customer account files. Not only does this make it more difficult to manage overall customer "relationships," but it becomes more difficult to differentiate or customize products.

I'm not sure if Microsoft wants to become a bank, but that may be an insignificant point. If they become experts in transaction processing and settlement, they may still own the most profitable piece of the equation.

Stephanie Stephens Denny

Self-employed researcher,Mesa, Ariz.

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