FT.com / Companies / Media & internet - Microsoft learns to love the net

FT.com / Companies / Media & internet - Microsoft learns to love the net

Microsoft learns to love the net
By Richard Waters in San Francisco

Published: March 9 2008 22:03 | Last updated: March 9 2008 22:03

It is nearly 2½ years since Bill Gates warned that a “services wave” was about to break on the internet that would be highly disruptive to established technology companies such as Microsoft.

The man he put in charge of devising a response to that technological sea-change now says the results of this long-awaited push, which amount to an fundamental overhaul of Microsoft’s business, are about to come into focus.

That it has taken Ray Ozzie this long to feel confident enough to promise that changes are at hand – the actual results are still under wraps and will become clear only in the coming months – is a testament to the difficulty of turning around a behemoth such as Microsoft.

“When I came in I saw a lot of things still focused on the enterprise, a lot of things still focused on the desktop, that I really wanted to change,” said Mr Ozzie, who arrived at the company three years ago and was later named chief software architect. “But the problem was that a lot of the company was still occupied in shipping the existing products they were working on.”

It was only after the latest versions of Windows and Office, Microsoft’s biggest cash-cows, were completed in late 2006 that the real planning could even begin on a new generation of products and services designed around the internet. “You’ll see many pieces this year, and you’ll continue to see things happen beyond that,” Mr Ozzie said.

So what does Microsoft have up its sleeve?

Central to its internet push is the extension of its existing computing platform, which currently resides on desktop PCs and servers, to the internet. As Mr Ozzie says: “Essentially, Microsoft’s a platform company.” It is the many developers who write programs to run on its software who account for its entrenched position.

The company’s new internet platform will rest on hardware (the new data centres it has been racing to build) and software (a new range of services, such as storage and processing delivered over the internet). One of those software services – an online version of the SQL database – was announced last week, but the main push is expected to be unveiled at the company’s developer conference in October.

“I assume that some number of years from now most major enterprises and many independent developers will be running their services in our data centres,” Mr Ozzie said. “They will, because there aren’t many people who have the capacity and the number of business reasons we have to build out that infrastructure.”

While Microsoft doubled its data centre capacity last year, though, Mr Ozzie ruled out a “step function” that would involve bringing a vast new bank of computing power on stream at one time. “It would be kind of insane to build too far ahead of what you need – you would buy hardware that was outdated by the time it was deployed,” he said. Also, the sheer difficulty of creating reliable internet services made it sensible to move slowly.

“If you look at any of the companies that have been experimenting with service delivery, and infrastructure for service delivery, you realise very quickly that you can take people’s businesses down by not having the right service quality of the right architecture at the back end,” he said. “There are no delays here. We want to be a long-term player.”

Meanwhile, consumers are also likely to see new services in the coming months as Microsoft extends its computing platform to the internet.

The most intriguing hint Mr Ozzie dropped last week was for something he termed a “device mesh”. To judge by comments by him and others familiar with Microsoft’s thinking, this would provide a way for consumers to link all of their computing devices over the internet – such as their PCs, smartphones, games consoles – so that personal data can be accessed from any of them.

The company has already registered internet address www.mesh.com, and is understood to be planning to use this as a location where consumers will be able to go to register their devices for the new services and set the levels of information they want to access from different places.

It is with new services such as these that Microsoft hopes finally to prove that it can turn the internet to its advantage, rather than seeing it as a disruptive threat to its existing businesses.

“Any time in my entire career that I have been through a technology transition – every single time someone was afraid of one of those technology transitions cannibalising [their existing business],” Mr Ozzie said. “If you think about it the right way it ends up in net growth. It doesn’t mean the old thing doesn’t change, it transforms in some way, shape or form.”
Copyright The Financial Times Limited 2008