Microsoft touts new era of software, services

Microsoft this week indicated it is entering a new era that will be marked less by monolithic programs licensed to corporate users and more by the integration of client and server software with Internet-based services.

The company used its annual financial analysts meeting in part to lay out its plans for corporate software and services. It plans to spend US$500 million in fiscal 2007, which began July 1, on R&D in the area of services.

Microsoft officials said that in addition to services, the company's enterprise focus will include evolving its high-performance computing platform, enterprise search tools, virtualization technology and security software for the edge of networks.

Company officials also hedged on the November release date they had set for Vista, saying development of the software was on schedule but that it would not ship until it was ready. Financial firm Goldman Sachs has already built a Vista delay into its earnings model for the company.

The biggest change was Microsoft's most detailed explanation yet of its software-as-a-service model, which company officials say will first appeal to consumers before branching out to small businesses and eventually large corporate customers. Microsoft is facing up to an emerging battle with Google, Yahoo and a host of start-ups developing services that could become alternatives to Microsoft's traditional platform and application portfolio.

"The world has evolved into one with amazingly powerful edge devices, amazingly powerful centralized services and high-bandwidth pipes connecting the two," said Ray Ozzie, who last month took over the role of chief software architect from Bill Gates.

"Rather than having to have a limited client and putting all the intelligence on the service, we can for the first time consider how to intentionally balance where to put the applications, where to put the data and how rich to make the user experience based on factors such as mobility, the nature of the device and the nature of the Internet connection."

Ozzie said Microsoft doesn't plan to turn its software portfolio into a lineup of service offerings, but will focus on an additive model in which enterprise users can complement client software such as Office and server software such as Exchange with services available over the Internet from Microsoft or third-party providers.

"It seems that Microsoft is becoming more serious about services and moving beyond being a desktop company, a software company," says Matt Rosoff, an analyst with Directions on Microsoft.

Ozzie said Windows Live, which is focused on consumer services, would serve as a strategic hub connecting client and server software and Internet-based services.

Skeptics say Ozzie isn't telling a new story but reviving Microsoft's Web services and .Net initiative introduced years ago that envisioned a set of software modules running locally or on the Internet that could be tied together on the fly to create composite applications.

"Microsoft is missing the ball in their marketing to IT," says Dwight Davis, an analyst with Ovum. Davis says Microsoft is reluctant to use the term service-oriented architecture to describe its efforts around services and integration of software components.

Microsoft says the forthcoming releases of Office 2007 and Vista will form the foundation on which to build out its services, as well as integrate with software from its mobile and entertainment division.

CEO Steve Ballmer said Microsoft's services and entertainment businesses, which includes Windows Live and Office Live, as well as IPTV and Microsoft's new iPod competitor Zune, have been tagged as the next big growth areas in terms of revenue and profit, joining client and server software.

Client software in the form of Office and Windows has been Microsoft's historical cash cow, generating well over 90% of its revenue. The company's server and tools business has posted double-digit revenue growth for the past 16 quarters.

"I think about how the company will move forward, about our growth, where we are going, and I think we have many things to be excited about," Ballmer said. "This next era of Microsoft will allow us to generate more shareholder value, more innovation and have more impact to change the world positively."

The company plans to focus on advertising-supported services, subscription-based software models and Internet-based delivery of software across its product line, Ballmer said. He added that the company's new era begins with him transitioning to fill Gate's role as Microsoft's champion of innovation.

The annual meeting, which brings in hundreds of financial analysts to the Microsoft campus, certainly had the flavor of a new Microsoft as it was the first time Gates was not in attendance. Gates, who plans to significantly diminish his role at Microsoft over the next 24 months, was on vacation in Africa.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Fontana

Network World (US online)
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?