Ray Ozzie is in the headlines again with the MicrosoftWatch story , and a long feature story in Fortune / CNN Microsoft's New Brain. I have written about Ray before and many of you know I worked for Ray at Groove Networks, so I am a little biased. Ray is a brilliant engineer and a true visionary big thinker. As CTO of Microsoft he has the ability to see his ideas through to fruition.
Industry writers like to write provocative headlines and stories with an angle, sometimes to the extreme. Ray is leading a transformation at Microsoft to "webify everything". ""Everything we do should have a presence on the Web," Ozzie says. One thing I learned from working with Ray is that balance is important. Ray will architect solutions that leverage the best of web attributes and the best of client based applications. Finding that balance and leveraging those strengths is the key to success.
It is classic business strategy to use your cash and capital to enter a business that few can afford to enter. Microsoft has $34B in cash and the pile grows higher every month. Using that cash to build out a world class server farm and infrastructure that only Google could rival is probably a good use of cash. The key strategic question is how to use that infrastructure...in the consumer market or the enterprise market.
I am reminded of a quote that I first heard from Marc Andreesen "In a fight between a grizzly bear and an alligator, the terrain determines the victor". Translation? Microsoft should think about keeping the fight in the enterprise area where they are strong, and not fighting in the consumer space where Google is strong.
Of course Microsoft has a good consumer business and will compete in all areas. But, search is an excellent case study on how difficult it is to capture the consumer market...even if you have unlimited amounts of capital.
Search is a game for big players. There are only four major players in search; Google, Yahoo, Microsoft, and Ask Jeeves. It costs billions of dollars to play in this market and I don't expect any new major players. After 3 to 5 years and billions of dollars spent, the search market is divided up about like this; Google 43%, Yahoo 28%, Microsoft 13%, and everyone else less than 10%.
LiveDrive, OfficeLive, and WindowsLive are great vehicles for Microsoft to get technology advancements to users quickly, in bite size chunks, without waiting years for the next major release of an OS or application. This is good for both consumers and enterprises. Using an advertising supported model for consumers and and a paid licensing model for enterprises probably makes sense, with choices and blends of both available.
Balance and choice is the key to success. Ray Ozzie is a master at striking the right balance.
