It was meant to usher in a new era for Microsoft. Bill Gates, along with recently appointed CTO Ray Ozzie and an entourage of lesser-known vice presidents pitched presentations and demos to press and analysts in San Francisco, California, to convince them Microsoft has a vision for "software as a service".
True to Microsoft style, the company will not be using the accepted industry name of "software as a service" but has coined its own moniker - "live software".
That's where the creative genius ran out, though. What was wheeled out was chiefly a response to Google's speeding revenue juggernaut. Live software wraps up much contemporary thinking but lacks the incisive vision found in .NET five years ago that attracted millions of developers and helped shape an industry.
Gates defined live software as software that remembers the users' preferences with services delivered to multiple devices - PCs, phones, cars or what ever. Those services are hosted and can be used in a federated, peer-to-peer network.
Live software is pure Web 2.0 pop culture. It's based on a well-established "service in the cloud" architecture that fuses - and confuses - things already in the market - from IM, social networking, downloadable music services and blogs to hosted email, business intelligence and customer relationship management (CRM) services.
The first implementations of live software are Windows Live and Office Live. Windows Live is a refreshed version of MSN with services like Hotmail updated to use Asynchronous Java Script and XML (AJAX) and feature an improved, almost Google-like, search and interface layer, and the ability to link to, and expose, profiles of buddies on your IM list as if you were using LinkedIn.
Office Live, for businesses with less than 10 staff, wraps-up hosting and design for web sites, and provides hosted email, collaboration, basic CRM and business intelligence. Integration across all of these is a feature. with small businesses, for example, able to export contacts in its CRM to an Exchange email list.
Ad a little here, ad a little there
Live software demonstrates less technical vision - a lot less than laid out for .NET - and has more focus on new business models and ways for Microsoft to make money online. Gates and Ozzie on Tuesday intoned a fervent belief in ad- and subscription-based revenue for live software. The engine for that new business is adCenter, due next year and currently in testing in France and Singapore.
AdCenter will serve-up not just context-based adverts online a la Google, but it will ensure that ads are planted deep into Microsoft's live applications. Ozzie joined other Microsoft executives by tempting software developers and service partners to its vast online territories and business applications with the promise of scale.
The shape of that market is 400 million consumers, 35 million small business users and 55 million online information workers each month, combined with a total of 250 million Hotmail users, 170 million users of Microsoft IM, 25 million users of MSN's Spaces, and more than two million gamers connected to Xbox Live.
"We are designing the ad services to be able to display ads in application containers whether that's a web based application or client side software. There are no prescriptive rules. We are designing it in a way we can make money and people putting ads in the software can make money," Ozzie said.
The pace at which Microsoft is moving and its Saul-like conversion to ad-based revenue and subscriptions betrays a growing desire to contain and beat Google. Months of rabid declarations and ballsy motivational talk from Gates and CEO Steve Ballmer counted for naught as Google last week reported a 13 per cent jump in revenue during its most recent quarter to put the company in to the Microsoft results ballpark of $1.57bn.
The desire to become number-one on the internet - again, since Microsoft erred with MSN and slipped badly against AOL during the 1990s - has forced the company's hand.
No more Longhorny waits
Elements of live software are essential. Microsoft had to engage with small business and services are arguably the best approach in doing that - hence Office Live. Service-based offerings provide a low-cost means for small businesses to tap IT without the headache of having to run the systems.
Live software also means more frequent product updates, making Microsoft less of a dinosaur prone to embarrassing Longhorn-style slippages and delivering product in large, monolithic chunks. Saleseforce.com has, for example, updated its CRM service 19 times since the year 2000 while there has been no new version of Microsoft's SQL Server in five years. "We are trying [to drive] a software and services mentality into as many different business groups," Ozzie said.
The partnering aspect to live software is something Microsoft can leverage against Google. The search giant saw 56 per cent of its revenue come from its own site during the most recent quarter. That's where Google is weak - the cost of sales on partner properties is relatively high. Microsoft clearly hopes to strike by tying in partners to its established, "franchise" approach to selling that it has used in software.
That franchise involves owning the Windows platform and brand and licensing it to others, who do the donkey work of selling and bringing product to market.
Live software, though, is replete with kinks, SKU clashes and so-whatism, There is no clear feature differentiation between Office Live and SharePoint Portal. A clash is also inevitable between Windows Live and MSN. Microsoft is positioning Windows Live as something for the net and device savvy while MSN is for the generation who like "prescribed" programming - meaning, those like their content served up by someone else.
However, users of MSN's services will be moved over to Windows Live over time. With no clear differences in services between MSN and Windows Live, Microsoft will be forced to again and again differentiate the two.
Windows Live also has - typically for Microsoft - an overly personal feel to it instead of a business software feel. Ozzie said Windows Live would evolve into something for businesses and governments, only initial offerings would be for individuals thanks to the ability to marshal email, IM, portals, RSS feeds and multimedia.
So future, so what
Microsoft will rely on partners with an entrepreneurial eye to add features that appeal to business users by interfacing with back-end systems and data.
Finally, offerings like Windows Live and live software in general suffer from a large "so-what" factor. An IM buddy list that has doubled in length from 300 to 600 contacts? Is that really a defining feature? There's also the niggling fact that "service in the cloud" architectures and peer-to-peer networking is nothing new.
Microsoft missed the internet boat during 1990s and fought hard to catch up. Microsoft clearly takes the Henry Ford view of history and experience, and has let Google, Salesforce.com, LinkedIn, Yahoo!, Typepad and GoDaddy, to name just a few, establish strong early leads in online services and software as a service.
Microsoft is now betting on partners and developers to help it catch up while changing its own business and software development methodology. Only time will tell whether live software will share the focus and disruptive impact .NET had. From a technology perspective, though, early signs are that it wont.®