Microsoft’s Ozzie Touts ‘Cheap’ Tech Revolution

Microsoft’s chief software architect dislikes the limelight but his role is crucial to shaping and coordinating the company’s far flung product and services plans.

That’s why it seemed a little odd for Ray Ozzie, who took over the job from the retiring Bill Gates two years ago, to hold forth on his vision of where the software behemoth is going to a group of financial analysts Wednesday at the Bernstein Strategic Decisions conference in New York.

“I’m more kind of the man behind the curtains so to speak, but I spend a lot more time hands-on with the product groups,” Ozzie said – never mind the subtle pun on his name and the wizard with a similar moniker.

Ozzie is passionate about what he does, particularly regarding pet projects like Live Mesh, search, and the company’s emerging software-plus-services initiative. However, despite the obvious interest from his audience, he didn’t spend much time talking about the company’s recently dropped bid for Yahoo (NASDAQ: YHOO) – referring to the deal’s potential as an “accelerator” for Microsoft’s strategic vision for search.

“We view Yahoo as an accelerator to the ad platform, potentially to the user engagement, and so on. We’d love to still discuss possibilities with Yahoo, but beyond that I don’t have anything to talk about,” said Ozzie.

That jives with what Gates and CEO Steve Ballmer have said recently — that the failed attempt to buy Yahoo was only part of a strategy – not a strategy in and of itself.

Ozzie has literally seen it all. He started programming mainframes back in 1968, he told the audience. Later, he went on to create Lotus Notes, which was eventually bought out by IBM, and then started Groove, which Microsoft purchased in 2005.

A ‘cheap’ tech revolution

Much of where Microsoft (NASDAQ: MSFT) and the rest of the industry is headed revolves around what he refers to as the “cheap” revolution.

“What’s going on right now is really based on the confluence of cheap storage, cheap computing, and probably more than anything cheap, ubiquitous communications amongst businesses, or homes and businesses, and data centers,” he said.

That has enabled entirely new business models and changed the game, to abuse a cliché.

“I know it’s kind of hard to think of being in the early days in search,” Ozzie told the audience, adding that there’s still plenty of room for innovation. For instance, he cited Microsoft’s announcement last week that it will pay consumers to use its search service.

“With Cashback you’ve seen that there is room for innovation in business model, and I think there are many, many different ideas that different people will have over the next few years in terms of innovation in business models that will help the end user, that will help the advertiser.”

However, search is only one part of the equation. Also important is user engagement as well as having a good ad platform.

The cheap revolution and the cloud

But the cheap revolution points in other directions as well, including towards computing “in the cloud” – that is, in data centers that users, whether business users or consumers, don’t have to know about in order to take advantage of. Enter another favorite project that was instigated by Ozzie called software-plus-services.

The idea, he said, is to provide those services that are appropriate “in the cloud.” For instance, Coca-Cola recently signed up to move all of its e-mail accounts – some 75,000 total – over to Microsoft’s Exchange Online service.

“They’re using the fact that these online services are available as a catalyst for that decision, and so that represents new opportunity, new growth opportunity for us,” Ozzie added.

Another aspect of the cheap revolution is that users are developing a “mesh” of devices that they use and they want them all to be able to communicate with each other transparently and seamlessly.

“You hear us say software plus services, because we believe that the real opportunities moving forward are PC plus phone, PC plus mobile Internet device, Web plus PC, as opposed to just everything in a browser,” Ozzie said.

Indeed, just last month, Ozzie announced what the company terms “Live Mesh,” a technology and business strategy to provide those services – partly in the cloud and partly on the devices – and at the center of that mesh is the individual.

“The Web is really the hub of a device mesh, and a mesh of people,” Ozzie added.

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