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As Gates Travels The World, His Protege Ozzie Mulls The Web

Since Ray Ozzie became Microsoft's chief software architect last month, he's been devoting much of his time trying to merge the company's multibillion-dollar software franchises with the booming market for software on the Web. He's also spending time on a decidedly lower-tech pursuit: drawing up movie-style storyboards that show how ordinary people use PCs to write blogs, read news, send e-mail, crunch numbers, and play games.

Ozzie's artistic tinkering supports a crucial goal--turning burgeoning demand for Internet-based software into something that makes Microsoft products more valuable, not less. "I strongly believe that Internet services will play a very important role for Microsoft," he said at a meeting with financial analysts at Microsoft's Redmond, Wash., campus last week. Ozzie assumed the chief software architect title when chairman Bill Gates split his technical responsibilities between two deputies--Ozzie and chief research and strategy officer Craig Mundie. Gates plans to give up his daily role at the company in two years.

The Web isn't the be all, end all, Ozzie says

The Web isn't the be all, end all, Ozzie says

Microsoft is planning Internet services that enhance the value of its desktop software and that potentially could encourage business and retail customers to buy new PCs or Windows-powered handheld computers that can run the new services. Microsoft may deliver online software that lets Outlook users publish their calendars to the Web so colleagues or friends can view them, and a version of its OneNote note-taking application that uses Web components to let people take notes with a handheld computer, then transfer them to a PC. Such online tools would make Office more valuable and could provide the spark for people to buy new devices capable of supporting the services, Ozzie said. CEO Steve Ballmer said Microsoft may eventually license its desktop Office suite and its new Office Live online software together.

Investors worry about whether online software could cannibalize Microsoft's desktop businesses, says Charles Di Bona, a senior analyst at Sanford C. Bernstein & Co. "Ray is saying you won't stop using your PC [just] because you can get it online," he says. "Everything's going to have some component of advertising monetization."

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