Put your ears to the ground, my friends, for the Beast of Redmond may be stirring. I’ve heard that Microsoft has begun briefing its large enterprise clients on an expansive and detailed strategy for moving its software business into the cloud. If the report proves correct - and I make no guarantees - the company will unveil the strategy to the public either next week or the week after.
It’s been two and a half years since the famous Halloween memos in which Bill Gates and Ray Ozzie warned Microsoft’s top executives and engineers that a “services wave of applications and experiences available instantly over the internet” was approaching and that it would reshape the traditional software business. Since then, Microsoft has been fairly quiet about its plans for riding this new wave. It’s rolled out, in a piecemeal fashion, some modest new web applications for consumers and small businesses, but these moves have largely been on the periphery of its business.
There are, it seems to me, at least two very good reasons for Microsoft’s deliberate pace up to now. First, its business and marketing priority has been the rollout of the recent upgrades to its core Windows and Office programs. It’s had to milk the cash cows. Second, it’s been building out the backend infrastructure - the data center network - required to run web apps reliably and on a large scale. These obstacles are now coming down. The upgrades have been out for more than a year, and, despite some glitches, have generated a lot of cash for the company. As for its infrastructure, a massive new data center near Chicago is expected to come online this year, adding to the capacity of the new centers the company has built or bought in Washington, Texas, and California.
The new strategy will, I’m told, lay out a roadmap of moves across three major areas: the transformation of the company’s portfolio of enterprise applications to a web-services architecture, the launch of web versions of its major PC applications, and the continued expansion of its data center network. I expect that all these announcements will reflect Microsoft’s focus on what it calls “software plus services” - the tying of web apps to traditional installed apps - but they nevertheless promise to mark the start of a new era for the company that has dominated the PC age.
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