Behind The Curtain of Microsoft's 'Great Oz': Page 2

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Memogate Revisited

Roughly six months after his arrival at Microsoft, Ozzie sent out a lengthy memo detailing how the company needed and needs to quickly migrate to a "software plus services" business model in order to survive.

Ozzie's October 2005 memo became a clarion call. And Gates showed his support for Ozzie's views by writing an accompanying memo to the entire senior leadership team.

While it was politic, Ozzie's "Internet Services Disruption" memo faulted areas where the company has stumbled. He took his new Microsoft brethren to task for being beaten to the punch by Adobe's Portable Document Format while its XML based formats in what is now Office 2007 were not more influential.

"For all its tremendous innovation and its embracing of HTML and XML, Office is not yet the source of key Web data formats –- surely not to the level of PDF," Ozzie noted in the memo.

He also criticized senior managers for missing Skype's Voice over IP (VoIP) success. And he was critical that, even though Microsoft had played a significant role in developing and promoting the AJAX (Asynchronous JavaScript and XML) technologies (define), it was not a leader in their use.

Perhaps worst of all: "We knew search would be important, but through Google's focus they've gained a tremendously strong position," Ozzie's memo said.

Since then, Microsoft has focused increasingly on rolling out more Live online services and in meeting Google head on in the search realm. In April, the company also introduced the Silverlight media streaming technology, which is as notable for its embrace of other operating systems and browsers as it is for its developer platform orientation.

The Melding of an Architect in Chief

You might expect that either Ozzie or Gates might have antibodies to each other. But, in fact, the two have much in common, especially when it comes to "fat clients." That affinity is easily visible in Ozzie's choice of words: "software plus services" instead of "software as a service."

"From my viewpoint, every one of our software offerings is either a socket for a new attached service that connects to that software offering, or an upgrade or up-sell opportunity to extend a product's value proposition up to the Web and, potentially, through mobile devices," Ozzie told analysts gathered for the company's annual financial analysts meeting in late July.

"Services is going to be a critical aspect of all of our offerings, from Windows and Office on the client to Exchange and SharePoint and [the Microsoft] Dynamics [business applications] and other things on the server, and in order to gain leverage across all of our offerings, we're taking a platform approach to services, giving each of our products the common benefits of cost, speed, scale, and monetization that a platform approach offers," he added.

At least, given the view from the outside, Ozzie appears to be making headway.

"I'd have to say Ozzie has changed Microsoft more than Microsoft has changed Ozzie," Dwight Davis, vice president of researcher Ovum Summit, told

Some of that is due to his people skills, according to George Moromisato, whose first job out of college was working on Notes Version 2 at Iris Associates. He later became chief software designer for Groove.

"I've seen many, many design sessions where Ray has been able to hold his own and push [the software engineers] to go further," Moromisato, who is currently director of user experience for Ozzie's personal concept development team at Microsoft, told "[Ray] conducts meetings so everyone feels they can speak up," Moromisato added.

That's been his style since early on, say colleagues.

"I think Ray is a 'good person' in terms of the 'Don't do evil' thing," said Bricklin, who is president of Software Garden, a software development firm and consultancy.

Where the Vision Meets the Sky

Ozzie is facing huge challenges with Microsoft. Much of his vision for the future will require that the company's myriad products integrate with each other and with competitors' lines. And many of those products will need to tie into the emerging software plus services approach.

Additionally, the company has 32 years of an operating history that can also be a burden to its change management plans.

At the top of that list of baggage is the Office productivity applications suite and its franchise. It has traditionally been one of the company's biggest cash cows. Yet, in the face of free offerings from Google and, the company is beginning to think about the unthinkable. Microsoft recently announced it would release a free, ad supported version of its Works low-end home productivity suite. The company has not said it will do the same with Office, but the writing is on the wall, according to some industry observers.

But if the world does move to a more Web-centric view of applications, it's better for Microsoft to obsolete Office itself than to have competitors do it, said several observers.

"Software plus services is really Ozzie's baby, and you can really credit him for moving Microsoft off the dime when there was a lot of resistance internally to that model," Ovum Summit's Davis said.

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