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Summary:

Steve Ballmer may be Microsoft’s CEO, but chief software architect Ray Ozzie is the more important “man behind the curtain.” Tasked with fil…

Steve Ballmer may be Microsoft’s CEO, but chief software architect Ray Ozzie is the more important “man behind the curtain.” Tasked with filling Bill Gates’ massive computing shoes since 2006, Ozzie’s main focus has been helping to revamp MSFT’s products and services so that they’re relevant to the Web 2.0 generation — with the entrenched development team kicking and screaming the whole time. In a lengthy Wired profile, Ozzie lays out some of the steps MSFT has taken and continues to take in its quest to maintain supremacy both on- and offline:

Shift from software, to “software plus services”: Selling both software and services will keep MSFT in touch with the consumer (and their wallets) on a continuous basis. Instead of discrete, one time transactions, Ozzie said the money (including ad revenue, subscription fees and software sales) would flow constantly; and consumers would get continuously updated products in exchange. He pegged Windows Update, Hotmail and Virtual Earth as current examples of the “software plus services” model, but said there would be more to come.

Be more like *Apple* and iTunes: Cloud computing may be trendy, but Ozzie says MSFT’s best course moving forward is a hybrid desktop/Web-based strategy — something rival Apple (NSDQ: AAPL) has made work with iTunes. “Some things still require local computation, offline persistence, and the control that only one’s own desktop processor offers,” he said. iTunes is the perfect example of that, as users install the client on their computer, and then use the Internet components to buy songs and stream music.

More after the jump.

Coming down the pike: With the debacle that has been Vista, MSFT’s future success hinges on new products that win over the masses instantly. First up is Windows Azure (code named Red Dog), the company’s new Web-based operating system. Essentially, its Windows for “the cloud” and is slated for a full release in late 2009. There’s also Live Mesh, a service that lets people (PC and Mac users, surprisingly) sync all kinds of files (including photos and videos) to various devices (like different computers, phones and cameras). It’s currently in public beta, with the full release planned for next year. MSFT is also working on a Web-based version of its Office software bundle, and will make both subscription-based and ad-supported, free versions available in the future.

Of course, MSFT is a bit of an underdog now — at least, as much of an underdog as a company that reported net income of $4.37 billion last quarter can be. Competitors in the cloud computing and Software as a Service space run the gamut from giants like *Google* and *Amazon*, to upstarts like Zoho; and they’ve all had a head start on recruiting early adopters and mainstream users. Then there are the grizzly predictions for both retail and advertising sectors next year … Still, as a devoted PC user, I’m one of the masses that will likely be looking forward to what Ozzie’s brood will unveil over the next year. After all, at this point, anything will be better than Vista.

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  1. Sounds very cool!

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