Microsoft's strategy in the new world of ad-supported online software is, in some ways, business as usual: use aggressive business terms to undercut rivals, and cozy up to developers.
At the company's Mix '07 conference in Las Vegas on Monday, Chief Software Architect Ray Ozzie and other Microsoft executives are scheduled to lay out the elements of Microsoft's "software plus services" push, its approach to making money from hosted Web services while keeping customers tied to its desktop software.
Microsoft executives will introduce the Dynamic Languages Runtime, software that improves support for dynamic, or scripting, languages in Microsoft tools, according to a person familiar with the plans.
The company will release a beta and Web site dedicated to Silverlight, its cross-platform multibrowser plug-in for writing media-rich interactive Web applications.
Although it's trying to break new ground in software services, Microsoft is working from a well-worn playbook. Its overall goal is to build an "ecosystem" of partners and developers who can build applications that tap into the company's online services and software.
"We very much think of ourselves as a company rooted in building ecosystems as a core competency, and that's what we want to bring to the software-plus-services world," said John Richards, director of product management for Windows Live Platform.
Microsoft said it will also detail liberal usage terms for its Web properties, allowing outside companies to build mashup Web applications that generate as many as 1 million unique visitors per month for free.
The moves are part of an ongoing transition at Microsoft as it chases online rivals Google and Yahoo in Web advertising businesses and seeks to move onto the turf of Adobe Systems, which is entrenched among media editors and graphics professionals.
Have at our APIs
With its updated business terms, Microsoft is trying to encourage Web entrepreneurs and developers to ally with its hosted services, such as Virtual Earth and Live search.
An application can have up to 1 million unique users per month without having to pay Microsoft. Beyond that, Microsoft will charge 25 cents per user per year.
These generous terms, which are explicitly allowed for commercial use, are meant to drive traffic to Microsoft sites and feed the company's online ad revenue--an area where it lags far behind Google.
If third-party companies that build mashups with Microsoft Web sites exceed 1 million unique users per month, Microsoft will look to provide advertising to that site, said George Moore, general manager of platform strategy for Microsoft Windows Live.
"Microsoft is rapidly trying to build up their advertising infrastructure and also give a way for companies to build commercial products with it," said Jupiter Research analyst David Card. "The twist here is you could pay or dive into their marketplace and let them sell ads for you and use the revenue sharing to pay for the technology licensing."
Microsoft will also open up access via APIs (application programming interfaces) to the online photos and contact lists of its Windows Live Spaces users if they give permission, Moore said.
The development of the Windows Live Platform is part of an ongoing effort, called Windows Live Core, spearheaded by Ozzie, executives said. The idea is to provide services to build applications that operate in the Internet "cloud" and that can tap into distributed sources of information, according to the company's description.
Microsoft showed how its existing product groups are moving into Web services when last week it released an early version of BizTalk Services, hosted services for moving information between different applications.
Although Microsoft clearly has a large number of customers, it is still working uphill when it comes to wooing Web entrepreneurs who build mashup applications, said Dave Cotter, chief marketing officer of Mpire
, a Seattle-based start-up that has built a mashup e-commerce application. Most start-ups with venture backing tend to use open-source products to build the company's offerings, he said.
"You know the marketing and technology will be there--it'll work. The real issue is what is the compelling call to action for the developer? What's the killer offering that's going to win over that Web developer?" Cotter said.
The company is also expected to discuss plans for making dynamic languages work better with .Net. According to Mix session descriptions, the company will detail projects aimed at letting Asp.Net Web developers and other .Net programmers work with dynamic languages such as IronPython.
To appeal to non-programmers, Microsoft later in the year will offer more code samples and documentation aimed at letting technically savvy businesspeople build mashup applications, Moore said.