Microsoft today announced a new strategy to blur the distinction between software that runs on PCs and servers and applications that run on the internet cloud.
In an interview with Computer Weekly, chief executive officer Steve Ballmer explains why he believes Microsoft's approach is right for IT departments. Users want software that will run in any number of places, he says. That means in corporate data centres, on desktop PCs, or a hosted data centre providing SaaS.
The model used by Marc Benioff, CEO of Salesforce.com, which provides services over the internet alone is wrong, according to Ballmer. "No one wants mainframe centralised computing," he says.
Microsoft plans to offer its own hosted service so that users can run applications in the so-called internet cloud. But the company has no immediate plans to scale back development of its desktop and server products.
In the future, Microsoft software such as Office will have four modes of operation. Users can continue to buy the software and install it. They may choose to have Office streamed down from a centrally managed image of the software stored on a server or via the internet. Or they can run Office using Microsoft Terminal Services, from a thin client device, which provides the Windows GUI over an internet connection.
"We will rewrite Office to work in a browser," he says. The product is likely to work a bit like the way Outlook Web Access provides Internet Explorer users with access to Microsoft Exchange.
Ballmer acknowledges that Microsoft is facing increasing resistance from users to upgrade to the latest version of Windows. In spite of sales in excess of 180 million units, the operating system has not been taken up by corporate users in the volumes anticipated.
"We dialled up security in Vista, but we had to break backwards compatibility to make it secure," he says. As a result, applications have needed to be re-engineered for Vista, slowing down the take-up in business.
Ballmer is adamant this will not happen again. "If we have to break backwards compatibility each time, we may as well get out of the operating systems business."
The next version of desktop Windows, called Windows 7, will be an easy upgrade for Vista users. "We will not be changing the underlying software architecture in Windows 7," he says.
Ballmer boldly predicts Microsoft's virtualisation product, Hyper-V, will corner 70% market share, He does not see the demise of rival VMWare as such, but in the database market where it competes with Oracle, Ballmer sees Microsoft taking a dominant stake.
Microsoft Office is competing with Google Apps. Even though Google has a tiny share compared with MS Office, Ballmer admits some of the functionality in Google Apps is actually quite good. "Google has done some clever things with its spreadsheet. I recognise that and you can bet we will have those features in the next version of MS Office," he says.