Microsoft Europe chief sees future in services

Microsoft sees its future as making the Net easier to use, differentiating itself from content-oriented rival AOL

Microsoft sees its future as making the Internet easier to use, differentiating itself from rival America Online, which has placed its bets on developing online content, Microsoft's European chairman said on Sunday.

"We see ourselves today and tomorrow as a software company, and we don't see ourselves any time in the short-(term) future considering buying a content company," Bernard Vergnes told Reuters at a forum of economic and political leaders in the Swiss mountain village of Davos.

"We might end up having agreements, relationships, with content companies, (we) might go as far as some...investment but in no case can we see ourselves running, or having responsibility for the definition of the strategy of a content company," he added.

This strategy lay behind Microsoft head Bill Gates' decision to step down as chief executive two weeks ago to take on the title of chief software architect and focus on software development at Microsoft, he said.

That move was announced soon after AOL said it would merge with the movie, cable and music empire of Time Warner, in a deal that many analysts said would push other Internet service providers towards closer ties with content providers.

Vergnes said Microsoft will maintain its content initiatives but that the potential technology innovations offered by the Internet would prove more important for Microsoft than enhancing content offerings.

Microsoft has spelled out a vision that includes expanding beyond the PC onto the Internet and into mobile devices and household appliances. Gates said recently that future Microsoft products could be used in places like health care systems that would let people see and store their medical histories, schedule doctor appointments and buy medication from a computer or handheld gadget.

At the heart of the strategy is a sense that while for now people are drawn to the Net for the things they can find on it, as that novelty wears off the appeal will lie more in what it can do for them, Vergnes said.

"Today it's probably true that the content is what drives people to a site, but the way people use Internet today is probably not the way they would like to use it," he said.

The ideas Microsoft is developing -- which it calls New Generation Windows Services -- will be fleshed out this Spring and should take more shape over the next two to five years, Vergnes said.

AOL may well remain an important Microsoft customer in some areas, as it seemed to have taken a more decisive step towards content provision and Microsoft's expertise lies in the technologies to support that, Vergnes added.

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