Last week Microsoft's Chief Technology Officer Ray Ozzie clarified the company's services plan, outlining a strategy where the company's consumer-targeted Windows Live services and enterprise software-as-a-service (SaaS) offerings begin to intersect.
Calling the latest trend toward delivering client software as services a "services disruption," Ozzie, speaking at Microsoft's Tech Ed user conference in Boston, said Microsoft's approach to embracing the new wave is "pragmatic."
He said the company plans to ease the transition of business customers from what is still largely a client/server model of computing to a new services-based model by offering both and gradually intertwining the two. "We think it's important to provide you the choice of architecture, both client/server and services," Ozzie said.
To this end, Microsoft is planning to offer more services that play in both the enterprise and Internet realm, such as federated network identity on the Web that links to its enterprise ActiveDirectory software, Ozzie said.
He also used Windows Live Search as an example of how Microsoft will deliver services that allow users to bridge the gap between the Internet and the enterprise. The tool allows a user to search for information simultaneously on the Internet, on a PC, on Microsoft Office Sharepoint Server and enterprise applications.
"We are at the beginning of the period when your view of enterprise services and Internet services become enmeshed and intertwined for the better," he said. "It's my job to ensure that Microsoft will be a leader in helping its partners and customers through this next transformation.
Some might argue that transformation is already in full swing, as companies such as Salesforce.com Inc. are doing a brisk business using the SaaS model. The way Ozzie framed it, however, the concept of enterprise services is in its nascent stage.
A cynic might argue that Microsoft has little choice than to position its Web-based services strategy in this way, as tied as it is to enterprise customers that still deploy its software on premises and license the technology per CPU. Microsoft has been criticized for being slow to embrace the Web, while companies such as Google Inc. and Yahoo Inc. started out using the Web as their services platform and so are ahead of the curve. However, those companies still offer mostly consumer services, while Microsoft has the ear of enterprise customers because of its massive software business.
According to Ozzie, all three competitors might soon be neighbors not only in offering services, but also in new data centers in the U.S. Northwest. Both Microsoft and Google have purchased property along the Columbia River -- Microsoft in the state of Washington and Google in the state of Oregon -- for the purpose of building data centers. Yahoo is rumored to be eyeing that area for a new data center, too, he said.
All of that infrastructure will have to be used by someone, Ozzie said, and while the bulk of those users are consumers now, that will eventually will change as the services move to the enterprise realm.
"These investments portend a fundamental change in computing and communications," Ozzie said. "Just like the PC and the cell phone and e-mail before it, this infrastructure will benefit ... anyone who has access to pipes fat enough to make use of these services data centers will provide."