Entrepreneur Watch: Ray Ozzie gets Microsoft to compete with Google

The word is in: Microsoft has a different view of the future than Google.

I've been wondering how and what Ray Ozzie, Microsoft's new Software Architect, has been doing to get Microsoft in touch with the "cloud," pushing Microsoft applications out of the desktop and onto the internet. Ozzie doesn't like to talk about strategy until he has some actual products to back it up.

Thanks to Knowledge@Wharton, the online magazine for the Wharton School, we now have some excellent indications. The Man Who Would Change Microsoft: Ray Ozzie's Vision for Connected Software

It's a long article, best read as a PDF printout, but I have a few observations on his comments.

It's telling that he refuses to list Google as a competitor, when Microsoft insiders tell me that the company sees Google as a huge threat.

When asked abut Microsoft's biggest competitive threats, he mentions Linux, Apple's iPod, continuing to lead in email and mobile applications, competing in business solutions, and finally, "I want to deliver online services to consumers and small businesses and big businesses."

Only "online services to consumers" really deals with the direct threat from Google. Although Google is delivering products to corporations, it is less of a threat there than in the consumer market, where it excels.

I still believe that corporate computing is where Microsoft's main strength and future lies.

The one group he mentions as reporting directly to him is "Live Labs," the group creating internet-based applications.

But he also has to "bridge" the many different groups within Microsoft to ensure the spread of good ideas, to make sure market strategy and business strategy are in synch, to make sure existing products work on new platforms. He has a lot on his plate.

That means he's dealing a lot with legacy products. He notes that this requires innovation "with a small i" as opposed to the big-I Innovation of major changes.

What counts as "big I" changes? Much of this also sounds like legacy product changes: hardware with multi-core processors, storage improvements, and finally, broadband improvements.

And here's where Microsoft's strategy differs with Google's. Google sees everything as residing in the cloud first, with the desktop machine in a secondary role. Ozzie strives for more balance between the two:

"...what part of an application should be in a data center -- somewhere "in the cloud" -- and what piece of that solution should be on a desktop or on a mobile device. The right balance varies based on the application."

That's a very smart view. But the advantage Google has is the same that Microsoft had in its early days. The products were developed for consumers first and crept in the back door of corporations as expense account items. That's exactly what's happening now with all products operating in the cloud.

Is it a difficult transition?

"Well, any transformation is difficult."

In other words, yes.

And finally, making money off the cloud. Isn't advertising "having difficulty getting traction" at Microsoft? Before answering, he goes on about Microsoft's "DNA," its strengths, the software-driven world we live in, transitions coming slowly, Microsoft's paranoia and ability to adapt, and then for the first time mentions Google.

"The success of the ad model is something that [Microsoft] didn't see. It saw search but I don't think it appreciated the power of that ad economic engine writ large. Is it difficult to compete with somebody who has executed as well in search as Google? Absolutely."

Ozzie has a big job ahead of him. I wish him the best of luck.

And thanks to Techmeme for pointing me to the article.

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Entrepreneur Watch

My opinions of interesting entrepreneurs, happenings in the tech community, fodder for my upcoming book on Google, and anything else I want to write about.

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Ray Ozzie gets Microsoft to compete with Google

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