Can Microsoft get its online services strategy right? To stay relevant, it has to.
In the summer of 1998, newly promoted Microsoft CEO Steve Ballmer told industry analyst Rob Enderle that Microsoft's long-term future would be in Internet services. At that time, however, Ballmer said the technology wasn't sufficiently developed--and the world wasn't ready--for an Internet services revolution.
"Our business is at risk," wrote chief software architect Ozzie in a red-flag e-mail over the challenges Microsoft faces from Internet-oriented computing
Photo by Kim Kulish
Today, the company faces one of the biggest challenges of its 32-year existence: Risk disrupting a massive installed base of users and developers--and cannibalizing its primary revenue source--by spending most of its energy and resources developing Web services, or get left behind as the world embraces Internet-oriented computing.
Microsoft, of course, wants to eat its cake and have it, too, calling its vision "software plus services," a convenient reworking of the "software as a service" phrase. That Microsoft has done a poor job of articulating that hybrid strategy is evidenced by the fact that even developers close to the company don't understand it. "I'm trying to get my arms around this," says Tim Huckaby, CEO of application development firm InterKnowlogy and a Microsoft MVP. "If I can't understand, and it's my job to understand, then CIOs are going to have a devil of a thing with this."
Some light may be shed at a sold-out conference in Las Vegas at the end of this month called Mix 07. Billed as Microsoft's conference for Web designers, developers, and decision-makers, it features sessions such as "Accessing Data Services In The Cloud" and "Front-Ending The Web With Microsoft Office." The keynote speaker and the exec charged with piloting Microsoft into the wild blue yonder of Web services is Ray Ozzie, chief software architect since Bill Gates turned over the title to him last year. Microsoft won't comment on what Ozzie plans to talk about at Mix 07. In fact, Microsoft representatives repeatedly tried to talk us out of running this story, at least until after the conference.
Ozzie hasn't been talking much, at least publicly, in the two years since Microsoft bought his company, Groove Networks, but it's clear he's serious about the effect online services will have on Microsoft's business model. In an October 2005 e-mail to employees titled "The Internet Services Disruption," Ozzie expressed the same urgency Gates did in his famous 1995 "Internet Tidal Wave" e-mail. "We must respond quickly and decisively," Ozzie wrote, or "our business as we know it is at risk." But he also was optimistic that "with such a broad variety of products and solutions, we are well positioned to deliver seamless experiences to customers, enabled by services and service-enhanced software."
SERVICES TO THE CORE
Microsoft's strategy for maintaining its dominance in an increasingly services-oriented environment is emerging slowly, in pieces, and in very general terms. "Sometimes people think about this just at the application level," Ballmer said at a financial analysts' conference in February. "But we think about [it in terms of] core infrastructure for storage, for transaction processing, and computation." Ballmer talked about providing "foundation services" such as directory functions and network protocols, "just like we have in Windows Server." And the fact that Microsoft's online application services will be key: "There will be application services for things like electronic mail, instant messaging, that people can build on."
At the center of Microsoft's online services drive is its 2-year-old Live brand. Despite the nomenclature, Office Live isn't an online version of Office but, rather, a set of tools for small businesses to help with Web hosting, online storage, e-mail, and Web analytics. Similarly, Windows Live is a collection of online services such as e-mail, file synchronization, security, messaging, search, and maps. Several of the Windows Live options are rebranded MSN services, and future products include an online clipboard, a collaboration tool code-named Tahiti, and a storage service known as Live Drive.
It doesn't sound impressive. But remember, Windows wasn't very impressive when it came out in 1985.
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