Laying the ground work
Ozzie, however, has already dissected the challenge and is laying out his plan for a services framework that he hopes to have in place by the end of 2008. He has highlighted the importance of advertising to help fund the online effort, including Microsoft's US$6 billion acquisition of digital marketing vendor aQuantive late last year.
To underscore the task at hand, Microsoft CEO Steve Ballmer said last year that eventually 25 per cent of company revenue will come from Internet advertising; in fiscal 2007 the total was just more than 3.5 per cent.
Improving those numbers could prove difficult.
"If you are able to win market share, eventually the profits have followed, but Microsoft has not shown that it knows how to make money on the Internet," says Thomas Haigh, a historian of computing at the University of Wisconsin.
To help grow its advertising revenue numbers, Microsoft is investing in search, user retention, technology, operations, sales and communication services.
Ozzie's services plan centers on three principals: using the Web as a hub, offering choice between on-premises software and hosted services, and providing a "fragmented" programming model that is defined by small components wired together on the fly.
His services framework has four layers: an infrastructure layer that is the physical platform to host and run services; a common services layer for such tools as the adCenter advertising platform, identity, synchronized storage and connectivity; a developer layer that includes protocols and APIs and the all-important Mesh Operating Environment that runs on the client and online; and the application layer that includes Live Mesh, Microsoft services such as hosted Exchange and SharePoint unveiled in April, and third-party services.
Ozzie also said in April virtualization will be critical for hosting services, especially consolidation of workloads to maximize CPU utilization and for isolating resources per customer.
He added that Microsoft in the past six months has recognized that it needs "a componentized or scalable Windows that starts with embedded and can be repackaged in other forms for a variety of different devices."
The company last year began showing peeks at a minimalistic version of the Windows kernel called MinWin that is in the early development stages and may be the apple of Ozzie's eye.
Microsoft currently has Windows Embedded CE and just this week announced that it has released the NavReady 2009 version optimized for portable navigation devices. The embedded operating system includes hooks to Microsoft Live Search.
The next big services unveiling will come in October at Microsoft's annual Professional Developers Conference, where Live Mesh will get a beta upgrade and be distributed to more testers along with an early preview version of Microsoft's Oslo modeling technology. The conference sessions will walk developers through building service-based applications and hooking into the Microsoft services framework.