Where are the roots?
"Some may view what we're doing here as a big, bold bet," Ozzie said. "But frankly, it's very natural for us as a platform company. Our current offerings represent a huge asset that we can migrate to our advantage into this new services world."
Experts believe he will have to change a corporate culture that historically divided up internal product development.
"He has a lot of cleaning up before school starts," Nucleus Research's Wetteman said. "There are different product teams and strategies that he needs to refocus."
The first example is Dynamics CRM Live, which is Microsoft's answer to Salesforce.com and other providers of line-of-business applications in the software-as-a-service model. The company plans to ship its CRM software, code-named Titan, next year. Titan will be available in three versions based on the same code, which will be tuned to run on-premises within a customer's network, to be hosted by a third party or obtained as a Live service from the Internet. The code also has been updated to add multi-tenant capabilities, letting multiple users reside on a single server.
This delivery model maps to the future laid out by Ozzie where services are additive.
For example, the on-premise version of Titan will integrate with features of Vista and Office 2007, but users also will be able to integrate with Windows Live services. Developers will be able to overlay Live Local maps with customer data within Outlook, a mash-up integrating Internet-based services, corporate applications and rich-client software on the desktop.
Director of platform strategy for Microsoft, Tim O'Brien, admitted the services model for other Dynamics software, such as ERP, is not baked sufficiently to talk about publicly.
Microsoft has conceded this kind of services model would require corporate users to weigh the trade-offs - cost versus control, for example - but said the shift toward tapping into a services infrastructure maintained by a third party could offer cost advantages that can't be ignored.
Will it fly?
Whether large organisations will shift resources to the services model is still a wide-open question, but the scales seem to be tipping in favour of it. A recent IDC survey of 512 North America-based IT professionals showed nearly 79 per cent have purchased or are reviewing software-as-a-service offerings. And Microsoft is proving there is some interest among smaller companies.
Its Office Live service, which launched on February 15 with free beta trials, already has 110,000 users, according to Ipwalk, which provides domain- and name-server data and statistics.
The basic Office Live service provides a domain name, hosting, a home page and five email accounts, and will be offered free. But the cost question won't be answered until later this year when Live Collaboration and Live Essentials are released. These add-ons provide collaboration and project management tools, among other services.
Whether Office Live's fee-based services fly will help determine to what extent Microsoft is a player. But make no mistake, the company is attacking the problem from all angles and from the bottom of the organisation to the top.