Microsoft's Internet Do Or Die

In the summer of 1998, newly promoted Microsoft CEO Steve Ballmer told industry analyst Rob Enderle that Microsoft's long-term future would be in Internet services. At that time, however, Ballmer said the technology wasn't sufficiently developed--and the world wasn't ready--for an Internet services revolution.

That was then. Now, with the increasing use of Web tools like Ajax, JavaScript, Flash, and XML, the technology is ready. The popularity of application services such as Flickr, Google Maps, and iTunes on the consumer side and Salesforce.com with businesses suggests that the world is ready, too. The remaining question: Is Microsoft?

	"Our business is at risk," wrote chief software architect Ozzie in a red-flag e-mail over the challenges Microsoft faces from Internet-oriented computing Photo by Kim Kulish

Today, the company faces one of the biggest challenges of its 32-year existence: Risk disrupting a massive installed base of users and developers--and cannibalizing its primary revenue source--by spending most of its energy and resources developing Web services, or get left behind as the world embraces Internet-oriented computing.

Microsoft, of course, wants to eat its cake and have it, too, calling its vision "software plus services," a convenient reworking of the "software as a service" phrase. That Microsoft has done a poor job of articulating that hybrid strategy is evidenced by the fact that even developers close to the company don't understand it. "I'm trying to get my arms around this," says Tim Huckaby, CEO of application development firm InterKnowlogy and a Microsoft MVP. "If I can't understand, and it's my job to understand, then CIOs are going to have a devil of a thing with this."

Some light may be shed at a sold-out conference in Las Vegas at the end of this month called Mix 07. Billed as Microsoft's conference for Web designers, developers, and decision-makers, it features sessions such as "Accessing Data Services In The Cloud" and "Front-Ending The Web With Microsoft Office." The keynote speaker and the exec charged with piloting Microsoft into the wild blue yonder of Web services is Ray Ozzie, chief software architect since Bill Gates turned over the title to him last year. Microsoft won't comment on what Ozzie plans to talk about at Mix 07. In fact, Microsoft representatives repeatedly tried to talk us out of running this story, at least until after the conference.