Microsoft describes software plus services

Microsoft's 'software-plus-services' strategy became less nebulous as the company described some of the technology behind the business model

Microsoft gave some of the clearest examples yet on Thursday of its vision for software plus services.

"This services transformation, from software to software plus services, is a very very big deal for our company," said Ray Ozzie, chief software architect for Microsoft, speaking during his company's annual financial analyst meeting. "It will be a critical aspect of all our offerings over the next years."

Software plus services in Windows could include a services component that might store device settings, he said. That service would make it easier for users to access the same application from various devices or buy new devices without having to create new settings.

Office customers might use hosted services, such as publishing, sharing, and editing, in conjunction with Office applications, he said.

If Microsoft has had trouble articulating its software plus service vision, it managed to clearly describe how it will enable that goal.

The company is currently working feverishly to build a hardware and software platform that will support its services vision across every one of its software products, Ozzie said.

This year, he's concentrating on building this services framework. In the next year to year and a half, the company will begin introducing new and key components of the platform, he said.

At the very bottom level of this services framework are Microsoft's massive data centers and the networks that connect them to the Internet. The company has more than doubled the size of its data centers over the past year and next week will break ground on a new data center in San Antonio, Ozzie said.

Above that level is what he said is the most fundamental layer, including a utility computing fabric made up of a virtualized computation layer, infrastructure that manages load balancing of applications, and horizontally supported storage.

The platform will also include a services layer that can be shared across applications. Such services include user identity services, presence information, and contact lists.

This platform will be used internally by Microsoft to support its own services, such as Windows Live, but partners will be able to use it to support their applications that work in conjunction with Microsoft products as well, Ozzie said.

The platform will also support enterprise applications and be part of an offer from Microsoft that allows companies to choose among several service models. "This choice is a substantial differentiator" for Microsoft, he said.

Companies may decide to buy Microsoft servers, which offers them the ultimate in customization, control and compliance, he said. Enterprises could instead hire third-party companies that might have a unique expertise in a particular area to host a service for them. Finally, an enterprise could use hosted services directly from Microsoft, which recently began discussing its hosted services aspirations.

Microsoft isn't alone in moving toward a services business, and other companies are already offering some types of hosted services that Ozzie described. Google, for example, already offers many hosted services aimed at consumers and enterprise users. The search giant, however, has come under fire for failing to offer enterprise customers the type of support they are used to.

Ozzie argues that Microsoft has advantages in that regard. "We are the only company in the industry that has the breadth of reach from consumers to enterprises to understand and deliver and take full advantage of the services opportunity," he said.

Ozzie also contends that Microsoft is one of only a few companies that has the financial capacity to capitalize in this "sea change."

Microsoft may also have an advantage against competitors because of the large installed base of Microsoft customers. "That lets us extend those things they're doing into the cloud in a way that helps them without tremendous disruption," he said.

Still, Microsoft, Google, and startups will all be experimenting in this realm, he said. Ozzie's focus is making sure that every developer at Microsoft is thinking about how they can leverage services to take advantage of the market opportunity, as opposed to letting a competitor come in and steal that business.

Copyright © 2007 IDG Communications, Inc.

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