Ray Ozzie's vision lacks an economic foundation

Some interesting analysis today from fellow ZDNet bloggers reacting to Ray Ozzie's speech last week. But if I distill this all a bit further I keep coming up against an economic conundrum -- one that pinches Microsoft between an Apple model and a Google model.

Microsoft, if it tries to do both models, wins against neither ... and falls. Getting out of this scrap will not be as easy for Microsoft as the Netscape/browser/Web problem of 1995-97, nor the Java jam of 1998-2003.

If as Ray says that Microsoft is the "middleware" between servers, data, and clients, then there's this little issue of the content and the applications/services that also play in this total ecology. With today's Internet -- more than ever before -- content, services and the architectural approach of mashing them freely for productive pursuits is both more powerful and more decentralized than any tightly coupled client/server model has -- or could attractively -- manage.

And that content and those services are increasingly, and -- I'd say irreversibly -- untethered from a dominant platform and development framework. So Microsoft, despite its gargantuan presence on the PC desktop with Office et al, and its Web portals, and games console, and content holdings, and mobile pursuits, and its billions, and its developers, can not really believe it can offer monolithically a compelling critical mass of the business and lifestyle services that individuals and businesses want and need, and somehow tie that altogether better than a creative-chaos enriched open model.

Will Microsoft provide and nurture the innovative sparks that foment the universe of services and content better than a global bazaar can? Not so far. For Microsoft to attract enough content and services to the universe now being described by Ray and via the Windows Live pivot-point approach, it's going to have to make a lot of providers and creators offers they can't refuse.

Microsoft understandably thinks it has the users to play off of for the unqualified alligance of the creators, and that will remain a possibility for a time; Vista must keep and deliver the users. And yet the providers -- and increasingly the users -- won't be locked in, not on the client, not on the server, not in the architecture.

Time Warner walked away from Microsoft earlier this year, and why wouldn't any other major media company? I'm still a bit pessimistic that Vista will bind ISVs and SaaS providers to Windows going forward. Will Vista keep the users on the farm enough to capture the content and service providers? Ask YouTube.

Microsoft's only hopes in pulling off Ray's Dream are to offer a better fully integrated approach than Apple with iLife et al, and do it far cheaper and with better security than Apple does in the home, mobile, and in the SOHO. And Microsoft will -- and this is crucial -- need to attract more content and media companies to its model than Apple. Haven't seen it yet.

At the same time, Microsoft is going to have to provide the services delivery platforms and tools combo that hosts, carriers, content providers, SaaS vendors, ISVs, and IP content-driven providers of all stripes -- from VOIP to podcasts -- will bet their futures on. And this infrastructure will have to be at the best price points, with the best support of legacy and future content and services. And this super services delivery platform must have a better TCO than an open source-endowed assortment of alternatives can offer.

And the only way that Microsoft could do that with an economic probability of success over a long period of time would be to go up against Google and the media establishment and win a significant growing portion of the global online advertising pie, with which to subsidize the cost of the platform and "middleware" ecology Ray is describing.

By using the revenue from ads, Microsoft would offer the lowest-cost super service platform -- charging its users and datacenter operators open source prices -- and perhaps make its latest vision work. Problem is there's Apple, Google, the media companies, the developers, the carriers, Madison Avenue, and all the content and services creators -- the actual people and businesses that both produce and consume content now -- who may have a different vision, and are already well on their way to building it without all that much need for Microsoft's help.

Without the critical mass of mass adoption on both creation and consumption, well then the economics required for Microsoft to over-run the now unleashed Internet Age won't support the notion of a Microsoft set of integrated, combined, and largely closed "middleware."

It's just too late. Ads will drive the new low-cost economics of Web services for consumers and small business, and SOA will be too compelling for large enterprises to even try and unify away from general heterogeneity. By the time Microsoft can begin to wage the ad dollars against the cost of using their stacks and "middleware," the myriad alternatives will be too irresistible.

Microsoft's offer will not be one the critical mass of providers, creators, and consumers cannot refuse.