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Q&A: Can Microsoft Regain Its Edge In Software?

Software expert Michael Cusumano looks at the Microsoft-Google battle, Vista delay, and other challenges facing Redmond, such as the need to build a new operating system from scratch.
Google currently has the advantage because they don't have their legs tied together like Microsoft developers do. It is like Microsoft is constantly running a three-legged race. No matter how good its people are, their legs are tied because they have to work within the Windows framework. So they can't move very fast. Everything has to be retested and stabilized through Windows. That's what really slows them down.

But if Microsoft sees something it needs to do, it has the ability to allocate people fast. As long as the product or technology isn't so big and clumsy that it takes thousands of people to work with it, then Microsoft can be tremendously competitive. That is what they need to try to get back to.

CRN: How could Microsoft answer back if Google decides to offer office applications for free over the Web, or for a fraction of the cost that Microsoft charges for them?

CUSUMANO: There is a stickiness factor, a point where people get very comfortable using a certain set of applications and it is not easy to get them to switch. And they usually buy this bundle when they buy a new computer. If Microsoft wanted to offer much cheaper upgrades to people over the Web or even bundled, they could do that. So if the Google model is the one that becomes dominant, it is certainly conceivable that over five to 10 years, Microsoft could shift to that model. Users could use Office for free, but they would need to access it through the Office Live site, which means that they might have to use MSN Search and view different advertisements. They are setting up the infrastructure to do that.

Also, I don't believe the world will shift 100 percent to any single model. You will still find millions of people buying new computers with software already installed because it is just too convenient. There will be a time when the entire world is wired, or set up for WiMax, but we're a long way from that. I think that Microsoft's franchise of selling packaged software is declining but is probably still good for at least a decade, maybe two decades.

CRN: So you think it will be more of a case of co-existence between the two companies, rather than Google taking over?

CUSUMANO: Right. You have many companies, including Microsoft, attacking search technology, because as loyal as Google users are, it is not hard to get people to switch. If Microsoft came up with a better search technology, and you had a little screen come up and ask you if you would like to switch from Google Search to MSN Search, all you would have to do is click yes. And Microsoft can embed that.

Google has a tremendous head start, but with software, it can turn on a dime. There was a time when Alta Vista had a tremendous head start. Google wiped them out, and they in turn could be wiped out. Google knows it, and that's why they are lean and mean. Hopefully, they won't become so successful that they will get too big and too slow.

CRN: So if Microsoft can return to its roots, the days when it was an innovative, fast-growing company, then it can come back strong?

CUSUMANO: Right. But I don't know that they have the guts to do it. Microsoft develops all sorts of neat products and technologies that could work on different platforms, not just Windows. If they have a great media player and great browser or Office suite, these products can sell on different platforms. Office is what made the Macintosh a viable business machine. And the browser was always available on different platforms, although Microsoft always optimizes its code for Windows because it is trying to sell Windows along with its applications. But even if the Windows business were to disappear, Microsoft has the ability to make money in other ways, by selling applications, tools or services of different types, as well as advertising. They could compete head to head on the strength of their technology, not just on the strength of their ties to Windows.

CRN: Is that the key factor, not necessarily breaking ties to Windows but loosening them and supporting other platforms?

CUSUMANO: Yes. Up to now, it has not made business sense [for Microsoft] to do that. But at some point in time, we will see whether Microsoft has the courage to actually go ahead and make the change.

*EDITOR'S NOTE: This interview occurred before Microsoft Chairman and founder Bill Gates' announcement last week that he plans to step back from daily responsibilities and hand over the chief software architect role to Lotus Notes pioneer Ray Ozzie, who's expected to drive the company's fledgling software-as-a-service push and spur other new initiatives.

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