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Microsoft urgently needs a winner

Three years into the job of Microsoft’s chief software architect, Raymond Ozzie is on the path to a complete overhaul of the company’s design and sales approach to software that brings them huge profits. His plan is based on ‘cloud computing’, composed of millions of computers utilizing a vast network of data centers (cloud of information).

This mass of connected computers will sell people various applications such as email or office tools, as well as pure computing power or storage space. Simply put, it is about performing a range of computing operations over the internet, remotely, rather than on one’s own computer at home. The idea is to provide business and private users with cheaper and more flexible choices in how they use software, while Microsoft would earn more money from each client and attract new ones.

Moreover, they really need a winner. The twice-delayed operating system Vista shows no signs of demand growth; on the contrary, a large number of users are requesting the older version, Windows XP, whose life Microsoft has already extended twice. In the meantime, their aura of market leaders has begun to fade, with years of lethargy and the rise of Google in the internet space. In some areas, the situation has gone so far that they are happy if they can boast of being a dark horse. However, the story is quite different when it comes to the amount of resources Microsoft can throw at an opportunity. Estimates speak of nearly $3 billion spent on the cloud, whose vision is still unclear, but Microsoft swears it is far more significant than anything competitors can offer. Amazon is already selling space and power online, Google offers office tools and other applications via the internet browser, and they are announcing new services such as additional computing power for outsiders.

Ozzie’s new system, named Azure Service Platform, will require a complete rework of almost everything Microsoft is releasing. In scope, this job involves rewriting the operating system as a task for beginners, for example. It will take five to ten years for Microsoft to make this shift towards internet computing, although Ozzie is already calling customers and developers to work. Pitney Bowes, Fujitsu, and Infosys are already testing what has been done so far. ‘We will create a new operating system for the next 20 to 50 years. You don’t often get the chance to rewrite it, so we are really making key architectural decisions today for many years to come,’ says Ozzie. Azure will work with Vista and XP (installed on 87% of the world’s computers) to eventually function with millions of devices running Windows Mobile or Apple’s operating system. So far, software for aggregating digital photographs and sorting them by date and person (using facial recognition tools) has been established, as well as an online email service that can display Gmail messages without ads, which is a rude jab at their source of revenue.

A fateful meeting

Microsoft’s cloud strategy actually began one June afternoon two years ago when Ozzie met Amitabh Srivastava, a senior researcher at Microsoft. Srivastava had spent several years reworking Vista. A one-hour conversation stretched into the night resulting in an agreement on how Microsoft should invest in internet computing. A small team of developers was gathered who could write a new internet operating system. Although the company earns most of its revenue from desktop software, they have as many as 165 departments responsible for developing internet software (MSN, Hotmail, Virtual Earth).

They explain their advantage over Google by the fact that unlike them, who actually only offer search and mail, Microsoft intends to offer a much broader spectrum of possibilities, which is supported by numbers such as the fact that they add more servers each month than Facebook has in total. Their biggest challenge may be defeating the army of developers who write software intended to run on Windows. The new generation of developers has grown up on the internet writing programs in everything but Microsoft (Java, Perl, Python, Ruby…). Ozzie, however, casually promises that Azure will support all of them and still offer access to more clients than anyone else.

On the other hand, Google is not intimidated. ‘We have the best web platform that exists,’ says Google Vice President David Girouard. ‘We will attract developers in the same way we attracted top engineers to Google. We have the best playground.’ How developers will earn within Microsoft’s cloud is still somewhat unclear, just as Microsoft’s profit margin in the future is.