Microsoft 2.0: Combining software and services

Microsoft 2.0: Combining software and services

Summary: During an evening panel, Web 2.0 conference hosts John Battelle and Tim O'Reilly peppered three of Microsoft's top executives with tough questions about Microsoft's future strategy for MSN, Windows and Office.

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TOPICS: Microsoft
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During an evening panel, Web 2.0 conference hosts John Battelle and Tim O'Reilly peppered three of Microsoft's top executives with tough questions about Microsoft's future strategy for MSN, Windows and Office. Microsoft has significant investments in Web 2.0 technologies, but the Microsoft execs stuck to mostly high-level overviews and statements of direction during the discussion.

When asked about buying or making a deal with AOL to gain traffic for its new adCenter network (launching in the US next month), MSN head Yusef Mehdi said no comment, but his body language seemed to say something is up. That's just my interpretation.

web20MSgroup.jpg

On the hot seat, from left: Gary Flake, Technical Fellow at MSN; Yusef Mehdi, senior VP at MSN; and Ray Ozzie, Microsoft CTO.

Later, I asked Gary Flake, a Technical Fellow at MSN who joined from Yahoo in April and was chief scientist at Overture, how Microsoft planned to get enough momentum to grab share from Google and Yahoo in the very lucrative paid search arena. He said MSN could go the syndication route and perhaps have more privileged partnerships (as in the current AOL/Google deal in which AOL got an equity stake in Google and very comfortable margins), as well as low keyword pricing to bring in advertisers. For MSN's adCenter to get traction with advertisers, however, the company needs to get a much bigger audience footprint, and replacing Google in AOL's search looks like a very direct route to that goal. 

When asked about how the Internet was turning existing business models upside down, the Microsoft executives gave generalized answers about melding software and services. "Almost every aspect is changing in some way, shape or form," Microsoft CTO Ray Ozzie said. "It can be a threat or an opportunity depending on how we respond." The future for Microsoft will be a blend of software and services, "more often than not weaving together the user experience enabled by hardware, software and services," Ozzie said.  

Mehdi added that the recent company reorganization, which combined MSN with the Windows client, server and tools group, was recognition that Web services and parts of MSN are essential to all of Microsoft's software. "Where software meets up with services is a profound thing and it is changing the company," Mehdi said.  So, Microsoft has gotten the message and is now turning its prodigious resources on winning the Web (code for defeating Google and other major players born in the dotcom bubble), as CEO Steve Ballmer said in a BusinessWeek interview.

Whether Microsoft can compete over time with Google's growing ambitions and products was a big question hovering in the room, but the three Microsoft amigos didn't light up the imaginations of the Web 2.0 crowd. When asked about a Web-based Office, Ozzie said that he doesn't expect applications like PhotoShop to be purely browser based, but said that because of the Internet and other capabilities Office will change progressively, with a goal of seamless weaving together of software and services. "I'm not a big believer it will go one way [pure Web] or all the way the other way," Ozzie said. He attributed the long delays between upgrades to a function of the complexity of the internal complexity code base being released. "MSN is on a six-month release cycle, Office on a several year cycle, and Vista is Vista," Ozzie said. He added that as companies with rapid release cycles, such as salesforce.com, have more complex code bases, their release cycles will lengthen. True, but updating Office every few years isn't going to fly in a service-oriented world where competitors are taking real time data on usage, as Microsoft does today, and integrating rapidly to meet customer needs.

Ozzie went on to say that the rules of the game have changed, and when asked what assets Microsoft has to work with in the new playing field, he talked about the company's scenarios that make PC, mobile devices and services work together better, reducing the complexity of people working together across consumer and business users. Flake talked about how in working with data, breakthroughs, such as parameter optimization, could come "moment to moment." 

Microsoft thinks in terms of often complex usage scenarios that require months or years of research and then field testing, while the fleet Web competitors let it fly with a steady stream of beta product releases. Microsoft is held to a higher standard by many customers, but as Ozzie said, the rules have changed. 

In response to a question about open document formats, Ozzie said that Office 12  has a significantly enhanced new user experience and open XML formats that can be transformed to what users want, and that the formats are documented and have a "pretty liberal license." Sounds like the party line.

When I spoke to Flake, he admitted that Microsoft has to get better clarity on the communications front internally and externally.  Sharing a common language with the audience can help, he said. "It's not a hobby for Microsoft," Flake said. "There is a major sea change and we will be a part of it." If so, Microsoft needs to trade in some of its aircraft carriers for lots of little speed boats... 

Photo Gallery: Web 2.0 Conference 2005

Topic: Microsoft

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15 comments
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  • Combining or comingling?

    As soon as M$ develops a web services platform that can be accessed by a non-M$ client - I'll be convinced.
    Roger Ramjet
    • Are you saying...

      ...that web services that are developed with .NET can't be accessed from, for example, Java running on Solaris?

      I'll bet that's news to a lot of developers who are doing just that.

      Carl Rapson
      rapson
      • Java running on Solaris

        http://www.analogstereo.com/vauxhall_meriva_owners_manual.htm
        us_forums@...
  • What's with...

    ...the "2.0" business? Lately, all we've seen in the media is "Web 2.0 this" and "Web 2.0 that". Now it's "Microsoft 2.0". Whatever happened to RSS? Only a few months ago, that was all the rage in the media. I thought RSS was going to change the world. Has it suddenly fallen out of favor?

    Besides, wouldn't it be at least Microsoft 3.0 at this point? After all, Microsoft remade itself when the Internet became a force to reckon with. Wouldn't that remake have been Microsoft 2.0?

    Carl Rapson
    rapson
  • No such thing as "Web 2.0"

    No such thing - it's just a catch phrase to get people excited about some new technologies, that's all.
    CobraA1
    • Amen Brother!

      I have been hearing about this and the flying car for 10 years now!
      also the Lizardman, chupacarda, alien abductions, better microsoft programing, crop circles, bigfoot, alien autopsy, elvis sightings, longhorn, Michael landon appearances, stockpiled WMD's, windows security, Kenedy assination plots, .......
      Stop being suckers people!
      An_Axe_to_Grind
  • The most interesting scenarios are not entirely Web-based

    I agree with Ozzie in that I think the world is not going to go entirely one way (Web-based) or the other (all PC/device-based). The most interesting scenarios take advantage of the easy deployment and easy updating of Web-based applications and the power of PC-based applications.

    There are lots of reasons for this. First, let's talk applications. While web email systems like Hotmail of Gmail are nice, they're clunky compared to a full email client like Outlook. I have played around with some of the Web (Ajax) based "productivity" applications (see http://en.wikipedia.org/wiki/List_of_websites_using_Ajax) for links to some examples and they're nice but nothing compared to Office or a good PC-based personal information manager. Try them for yourself to see.

    Then there's hardware. PC and mobile device hard ware is getting incredibly cheap. I just bought a duel core 3.3 mhz systemn with 2 gigs of ram and 1 tb of disck space for less than $3,000. There are literally billions of PC's out in the world and will be billions of smart phones out there within a few years. Just this week MIT talked about the $100 PC coming. Why would we want to use all of that processing power for nothing more than driving dumb-terminals with browsers? It just doesn't make sense. Software developers should build applications that use that processing power to do cool things that you can't with purely Web-based applications.

    Then there's privacy and security. You can whine all you want about problems with security of Windows or PC's in general but I would guess that most people are still more comfortable having their personal information on their own PC rather than up in the cloud. Do you really want your Quicken files sitting on a server somewhere? I'm sure people will get more comfortable with this over time but I don't think these concerns will ever go away entirely.

    Then there's connectivity. Sure, someday connectivity may be 100% pervasive but I don't see that happening any time soon. I live in a very "wired" city and there are still many many places where I can't get WiFi access or even decent wireless phone service. Do I really want to rely completely on Web-based applications for my computing? Not this decade.

    The good news is that good software developers will find ways to give users the best of both worlds. Although it will take time to come to fruition, I think amazing applications will come along that have locally running code, combined with code running on servers that deliver experiences we can barely imagine. I saw a demo at Microsoft's PDC last month of an application developed for 3M. The application ran in a browser (IE now but relatively trivial to make it work in other modern browsers) that used Windows Vista's new presentation technology running on the PC and connected out to Web services to deliver an absoltely amazing experience. Because the application used local resources the graphics were incredible - 3D zooming, great navigation, rich graphics etc. But the application also connected up to Web-based resources using Web services to bring data into the application. The application runs in a sandbox so it cannot touch the file system and is secure. I'm sure there are similar technologies being developed by lots of other companies as well.

    So the bottom line to me is that the focus on "Web 2.0" is mostly a media thing. They love to focus on cliche's like "paradigm shift" and they love to set up wars between good (Google) and evil (MSFT) but my guess is that many of the people that are actually building software have a more sophisticated and realistic view of what's going on. They know that the Web will change the way software is built but it simply isn't as simple as Web only.

    Just my two cents.
    marksashton
    • Good post.

      I think part of the problem is some people think in terms of interoperability only, how well separate pieces of software can talk to each other.

      The idea of combining them, making different devices and different sources of computing work together in ways that none could do separately is beyond comprehension.

      Because in a standards based world, nothing advances in sync. The whole advances only as fast as the slowest committee member in the slowest moving category.

      Microsoft may be slower in incremental improvements, though even that's arguable, but only owning the whole range of software makes some possibilities available.
      That's what you (and Microsoft) are calling an experience, I believe.

      Microsoft's problem is not producing, it's finding functionality people are willing to pay them to produce.

      It is about money (and vision), after all.
      Anton Philidor
      • I'm going to sound like a cheerleader but...

        MSFT has actually done a lot for interop. They were among the first companies to get fully behind Web services. They, along with IBM, BEA and a few others, have been doing more to drive Web services interop standards. They may sometimes be slow but they eventually get it. They know that many of their best customers work in mixed environments - Windows Servers, Windows desktops mixed with varoius Unix flavors. They know that many of their best customers use SAP and Siebel and Oracle databases so they'd be foolhardy to not support interop.

        The irony is that it is often just as difficult to get various "open" systems to work togehter as it is to get the open systems to interop with Windows environments.

        I agree with your point about $$ being key. The big question is will people be willing to pay for software. All the talk about "services" being the only thing worth paying for kind of reminds me of the old days of the Web when everyone said the only thing that matters is "eyeballs." We saw what came up that...

        Thx.
        marksashton
        • Interoperate and cooperate.

          Microsoft accepts a very specific measure of strategic success: sales and profits. The buyers will be cheerleaders, or not.

          Worth noting the difference between interoperate and cooperate.

          Steve Ballmer watched Microsoft software interoperate with Linux and said it hurt his eyes. Imagine what beauty there would be in his eyes if the software were all Microsoft.

          I expect that interoperation is a necessity for Microsoft, a practical goal. The vision is to find a way to have Microsoft software do some useful things in concert far better than a mix of packages can provide.

          Maybe they've found some. As mentioned, we and Microsoft will know how successful they've been based on a very clear measure.
          Anton Philidor
          • Gotta pitch in my two cents here...

            I have to use our products as an example of how things really should work:

            We have an "n-tier" application that operates in both worlds (web and local net) AND operates in both realms (MS and Linux).

            Our applications allow people to enter data from wherever is convient, on the LAN/PC or the web. They can use whatever NOS they like, NetWare, Linux or MS. They can use whatever database they like, SQL Server or MySQL.

            The whole key to making this work was NOVELL! People seem to forget that Novell has always been the innovator when it comes to integration. You can start with their SAA products, to the original flavors of UnixWare, to Tuxedo, to MONO. The list goes on and on and on......

            I guess what I am trying to say is that there is more to this world than MS and anti-MS. Thank goodness there are still companies like Novell that care about making things work.
            htotten
          • Novell continues, for now.

            As far as I can tell, the Novell strategy is primarily to sell SuSE, the product with which a German company could never make money.

            The original idea seemed to be linking SuSE to Novell's prior (and future) products, but the linked products don't seem to be showing up much in reported discussions with the press.

            Microsoft has been highly successful competing with Novell, though I'd agree that Novell products are useful.

            So how does that fit into your argument?
            Anton Philidor
  • If you were running Microsoft...

    ... you'd have lots of little "speed boats" because:

    ... updating Office every few years isn't going to fly in a service-oriented world where competitors are taking real time data on usage, as Microsoft does today, and integrating rapidly to meet customer needs.

    This "rapid integration" means frequent issuances of beta software, with improvements, compared to Microsoft, which takes time to work on quality and connections with other software:

    Microsoft thinks in terms of often complex usage scenarios that require months or years of research and then field testing, while the fleet Web competitors let it fly with a steady stream of beta product releases.


    Okay, but what would you sell and how would you sell it?

    Following your system, Microsoft would have to charge for beta releases continuously, a subscription paid for software known to be both faulty and incomplete, a continuous process not just of cleaning the code, but of making the functionality work to its potential.

    You would probably have a brief and noisy tenure as CEO of Microsoft.


    Mr. Ozzie gave a vague picture of Microsoft's answer.

    When asked about how the Internet was turning existing business models upside down, the Microsoft executives gave generalized answers about melding software and services.

    Quoting:
    The future for Microsoft will be a blend of software and services, "more often than not weaving together the user experience enabled by hardware, software and services," Ozzie said.
    "I'm not a big believer it will go one way [pure Web] or all the way the other way," Ozzie said.

    The web will be used when appropriate, based on the most efficient means of delivering what Microsoft has decided to provide through a range of software services.

    Quoting again:
    ... when asked what assets Microsoft has to work with in the new playing field, he talked about the company's scenarios that make PC, mobile devices and services work together better, reducing the complexity of people working together across consumer and business users.

    The web can deliver updates, as Bill Gates mentioned, and it can help sync devices. Sometimes it can deliver services.

    If you were running Microsoft, you'd actually want all of your software working together, so that the customer gains advantages by using all of them. That way you sell more packages.

    You would also produce upgrades when the functionality gains make them worth buying. Those functionality gains will be not just in the separate pieces, which are easy enough to work through quickly with betas, but in the linkage with your other software.
    Gives you more improvements to sell.

    You might end up increasing your $1+ billion a month profits that way.
    Anton Philidor
  • Judging by microsoft's history,

    MS will wait to see how Sun/Google (Soogle? Gun?) does things.

    Then MS will step in, opening its big bountiful booty and spend spend spend Soogle/Gun/whatever into near-extinction.

    They've done it before, they do it now, they will do it in the future.

    As for "booty", it's the old school definition pertaining to money acquired via unsavory means... And definitely before 1990's re-definition when "booty" became synonymous with a particular body part...
    HypnoToad
  • What about the Scobble Buyout

    I guess That Scobble didnt got the margin he wanted to acquire the company he wanted. If so, it would plaster all the walls of the news by now.

    Maybe someone will go to the news
    gagnon_pascal@...