Ray Ozzie's 20 Questions

Ozzie, who is Microsoft's incoming chief software architect, will present at the Goldman Sachs Technology Investment Symposium.

The venue is appropriate. In April 2006, Microsoft executives sent scores of financial analysts running for nitroglycerin tablets, as they felt catastrophic heart failure rapidly approaching. The cause: an apparent $2 billion-plus increase in expenses, presumably investment in Web services.

Nearly a year later and with a fat bank balance against which to write checks, Ozzie should have something to show for the money. A financial analysts symposium is good place to tell all.

My colleague Eric Lundquist offers up 10 things Ozzie needs to say about Microsoft Live versus Google. Eric hits all the right questions and really leaves nothing else to ask. But, in the spirit of 20 Questions, I will add 10 of my own, starting with No. 11.

11. What about the server? Web 2.0 is shifting informational relevance from desktop software to the Web. But applications on the Web still need software, just on the server. Why isn't Microsoft shifting more relevance to the server and positioning its server software as best-of-breed for the Web platform?

12. Where are the hosted software-as-a-service products for the enterprise? When Salesforce.com issues an update, all customers get it immediately. If Microsoft issues an update, customers roll it out piecemeal. What Microsoft needs to deliver are more modularized, centralized server products that let enterprises serve up applications via browsers, lighter clients or widgets—anytime, anywhere and on anything. If Microsoft changes the network model, it can also change the distribution model so that new features can be pushed out quickly to everyone.

13. Is Live dead, or what? There is way too much brand confusion, and Microsoft has let bloggers and reporters write too much about Live's impending death. Microsoft should have come out long ago with a definitive statement about Live and MSN. Confusion drives away advertising customers and development partners.

14. What's the Live subscription model? Google is gaga over advertising, but it doesn't do diddly with subscriptions. Microsoft could excel at subscriptions. My favorite photo-sharing site is SmugMug. It's a profitable, family-run operation where everybody pays. There is no advertising. Subscription pricing isn't that far from volume licensing, which is subscription-like.

15. Will Microsoft rent applications? If consumers will pay for Flickr on the Web, surely some will pay for something better on the desktop. Financial analysts get giddy talking about Microsoft unearned revenue from volume licensing. There needs to be a counterpart for desktop software. Wall Street would love to hear about Microsoft applications for rent.

16. What about bundling? Microsoft's development model is wrong for the Web 2.0 world. Bundling is a bad strategy. Not only are applications overbloated, but their real value is lost. Every successful consumer business breaks up the pieces and sells them separately. Microsoft needs a more a la carte strategy. Offer less for less, and sell extra features and services for more than what the customer would have paid for the larger product with bundled features.

17. When will Windows become a true commerce platform? Next to the Web, Windows is the largest software distribution mechanism on the planet. So why isn't Microsoft using it that way? By leveraging built-in product activation and automatic update mechanisms, Microsoft could turn Windows into a massive platform for selling and distributing products and services, securely. Instead of free Windows Ultimate Extras, Microsoft should have put a similar mechanism in all Vista versions with enticing extras to purchase right from within the operating system. Now that's software as a service.

18. When is Microsoft going to fix search? Windows Live Search simply doesn't deliver results that are as relevant as either Google or Yahoo. Relevancy is everything in search; otherwise people will go elsewhere.

19. When is the parade of me-too products going to end? It's difficult to identify any Windows Live or MSN product that didn't follow Google or some other Web 2.0 company. A little originality would go a long way. Ozzie's Groove and Lotus Notes were trendsetting, category-defining products. Isn't it time for Microsoft deliver some Web product that is truly original?

20. What's the channel strategy? Microsoft has no dedicated sales force. It relies on third parties to sell and service the goods. Web services are often offered direct. Microsoft needs to articulate a clear software-as-a-service strategy for partners, starting with developers. Right now, the stated opportunity is nebulous at best.