[Infowarrior] - Software via the Internet: Microsoft in Œ Cloud ¹ Computing

[Richard Forno]

September 3, 2007
Software via the Internet: Microsoft in ŒCloud¹ Computing
By JOHN MARKOFF
http://www.nytimes.com/2007/09/03/technology/03cloud.html?pagewanted=print

SAN FRANCISCO, Sept. 2 ‹ The empire is preparing to strike back ‹ again.

In 1995, Microsoft added a free Web browser to its operating system in an
attempt to fend off new rivals, an effort ultimately blocked by the courts.

This week, it plans to turn that strategy upside down, making available free
software that connects its Windows operating system to software services
delivered on the Internet, a practice increasingly referred to as ³cloud²
computing. The initiative is part of an effort to connect Windows more
seamlessly to a growing array of Internet services.

The strategy is a major departure for Microsoft, which primarily sells
packaged software for personal computers. With this new approach, Microsoft
hopes to shield its hundreds of millions of software customers from
competitors like Google and Salesforce.com, which already offer software
applications through the Internet.

Microsoft¹s new Windows Live software suite includes an updated electronic
mail program, a photo-sharing application and a writing tool designed for
people who keep Web logs.

The new service is an indication that Microsoft plans to compete head-on
against archrival Google and others, and not only in the search-engine
business where it is at a significant disadvantage. Instead, Microsoft will
try to outmaneuver its challengers by becoming the dominant digital curator
of all a user¹s information, whether it is stored on a PC, a mobile device
or on the Internet, industry executives and analysts said.

Millions of PC users already rely on Web applications that either provide a
service or store data. For instance, Yahoo and Google do their own forms of
cloud computing, offering popular e-mail programs and photo-sharing sites
that are accessible through a Web browser. The photos or the e-mail messages
are stored on those companies¹ servers. The data is accessible from any PC
anywhere.

Hundreds of companies in Silicon Valley are offering every imaginable
service, from writing tools to elaborate dating and social networking
systems, all of which require only a Web browser and each potentially
undermining Microsoft¹s desktop monopoly.

Google, the most visible example, took cloud computing a step further last
October and directly challenged Microsoft by offering a suite of free
word-processing and spreadsheet software over a browser.

³To the extent that the industry is moving toward an on-demand business
model, it poses a threat to Microsoft,² said Kenneth Wasch, president of the
Software and Information Industry Association and a longtime Microsoft
adversary.

Microsoft is a late entrant to a set of businesses that are largely defined
as Web 2.0, but the company is counting on its ability to exploit its vast
installed base of more than one billion Windows-based personal computers. It
plans to give away some of its services, like photo-sharing and disk
storage, while charging for others like its computer security service and a
series of business-oriented services aimed at small and medium-size
organizations.

³I think Microsoft is going beyond search to a more sophisticated set of
services,² said Shane Robison, executive vice president and chief strategy
and technology officer at Hewlett-Packard. ³It will be a race, and who knows
who will get there first?²

Brian Hall, general manager for Microsoft¹s Windows Live services, said,
³We¹re taking the communications and sharing components and creating a set
of services that become what we believe is the one suite of services and
applications for personal and community use across the PC, the Web and the
phone.²

He said the software would be the first full release of Windows Live that is
intended to produce a ³relatively seamless² experience between the different
services and applications.

The Windows Live service ‹ which will be found at www.live.com ‹ includes
new versions of the company¹s Hotmail and Messenger communications services
as well as Internet storage components. Microsoft executives said there were
roughly 300 million active users each on the Hotmail and Messenger services,
with some overlap.

The software release will offer PC users the option of downloading a set of
the services with a single Unified Installer program, or as separate
components. The individual services are Windows Live Photo Gallery, Windows
Live Mail, Windows Live Messenger 8.5 and Windows Live OneCare Family
Safety, a computer security program.

The release, though it includes the Windows Live Writer blogging
application, carefully avoids cannibalizing two of Microsoft¹s mainstays,
the Word and Excel programs.

Windows Live services also underscore Microsoft¹s desire to become the
manager for a user¹s data wherever it is located. Although they will not be
included in the initial test release, the company¹s recently announced
SkyDrive online data storage service and its FolderShare service are being
folded into Windows Live. SkyDrive currently gives test users 500 megabytes
of free Internet storage, while FolderShare makes it possible to synchronize
between multiple computers ‹ including Apple¹s Macintosh computers.

³When you think storage, think Windows Live,² Bill Gates said in an
interview this summer. Microsoft is moving to create an experience that will
divorce a user¹s information from the particular device the person is
working with at any moment, he said.

Microsoft¹s new approach is in many ways a mirror image of the strategy used
during the 1990s in defeating Netscape Communications when the start-up
threatened Microsoft¹s desktop dominance. Microsoft tried to tie the
Internet to Windows by bundling its Internet Explorer Web browser as an
integral part of its desktop operating system. The company lost an antitrust
lawsuit in 2000 brought by the Justice Department in response to this
bundling strategy.

Today, that strategy has been flipped with the growing array of Web services
that are connected to Windows. But the new approach, which the company
refers to as ³software plus services,² is once again beginning to draw
industry charges of unfair competition from competitors.

To head off that challenge, Microsoft has been participating in various
international organizations that are setting standards over a wide range of
services: from those aimed at consumers, like blog-editing and photo-sharing
applications, to automated business processes like Web-based customer
relationship management systems for sales staff and automatic ordering and
logistics applications.

Last week, for example, Microsoft executives were put on the defensive after
the company¹s efforts to gain international adoption for a
Microsoft-designed document format known as Open Office XML, led to charges
of vote-buying in an international standards vote in Sweden.

After the charges received international publicity during the week, the
Swedish Standards Institute reversed its position and decided to abstain on
the issue, and a Microsoft executive apologized publicly for the gaffe.

On Wednesday, Jason Matusow, Microsoft¹s senior director for intellectual
property and interoperability, wrote on his Web site: ³I understand the
concern raised by this error in judgment by an MS employee. The only thing I
can say is that the right things were done as the issue was identified. The
process and vote at S.I.S. were not affected.² Microsoft did not specify
what actually had transpired.

While the industry dispute over document formats was visible last week,
several Microsoft competitors were quietly pointing to another standards
issue that may prove to be a significant advantage for software giant in the
future.

A set of Web services standards that have emerged from the World Wide Web
Consortium might give Microsoft a performance advantage, according to
industry executives at three companies, who declined to be identified
because they are Microsoft business partners.

Microsoft¹s standards efforts have angered its competitors because four
years ago the software publisher argued publicly against adding compression
features that are designed to improve performance to industry Web services
standards. Now, however, Microsoft has developed its own compression
standards that will potentially make its versions of Web services perform
better than those of their competitors.

³They¹re playing the game right,² said a rival. ³The idea is to offer a
solution that works better in an all-Microsoft environment.²

On Friday, a spokesman for Microsoft said that services that take advantage
of the Web standards effort like Silverlight, a new system for displaying
multimedia content via a Web browser that competes with Adobe¹s Flash media
player, would not be included in the first release of Windows Live, but
would be added in the future.