Which Comes First, Software or Services?

Once again, Microsoft will be talking about software plus services—the mantra response to Google and its Web platform (aka Web 2.0) counterparts. The approach makes sense to Microsoft because it dominates the desktop. Microsoft wants to keep computing and informational relevance on the desktop; preserve the status quo.

Sorry, but Microsoft's approach is back to front. There, Google has it right: services plus software.

That said, Microsoft has the potential to deliver services plus software, but it's only going to get there by partially abandoning the desktop and shifting its development and partner resources to the server. Problem: Office and Windows make so much of Microsoft's profits, the risk is simply too big for company executives to take.

Allison Watson, corporate vice president of Microsoft's worldwide partner group, told my eWEEK colleague Peter Galli that "software plus services is an industry phenomenon." Her misguided take is an example of how narrow-minded is the Microsoft perspective. Yet, viewpoint makes sense, because Microsoft's dominance is in desktop software.

Windows Live Writer is one small but good example of Microsoft's current approach to software plus services. Live Writer is a tool for creating blog entries, and it's really an essential tool for anyone posting to WIndows Live Spaces. Microsoft did right by having Live Writer support multiple blogging services. But the relevance pulls back to desktop software, away from the service. Most blogging services offer adequate posting capabilities in their Web interfaces. I'm writing this post in a browser using Movable Type's Web-based writer. Some of my colleagues write posts in Word, which introduces some nasty character problems when text is posted in a blog. Because they insist on using desktop software, Live Writer would be a better tool for them.

A services plus software approach would put the software on the server, rather than the desktop, and much of the complexity with it. Complexity is one of the main differentiators between the software plus services and services plus software approaches. Desktop software tends to be much more complex than its Web-based counterpoints for lots of reasons. Desktop software's computing functions are largely self contained. In cases such as Outlook, server software extends functionality but also complexity as more features turn on.

By contrast, most Web platform products and services available today expose less complexity in their user interfaces than desktop software because:

• Most of the computing functionality comes from the server.
• Clients tend to be lighter, such as browsers or widgets.
• Development tool limitations compel, simpler more task-oriented features.

While I was writing this post, Microsoft issued a bunch of press releases about today's software plus services announcements. As expected, Microsoft is finally taking the wraps off Live CRM.

Office Live and Windows Live Spaces are good examples of where Microsoft software plus services products are headed. Unless Microsoft changes its approach, they foreshadow what to expect from Live CRM and other hosted services the company will offer.

Microsoft executives like to talk up Windows Live Spaces success by the number of users, somewhere in the range of 100 million blogs. But a review of those blogsites reveals two trends: Most blogs come from countries where there are limited other options or the blogs' only posts are pictures. Live Spaces isn't the most user-friendly of Web 2.0 services. There is too much complexity in the browser, although photo uploading from a Windows PC is almost drop-dead easy. Mmmm, could that have something to do with why there are so many photo-only Live Spaces?

Office Live offers its share of complexity, even though Microsoft clearly tried to make things simpler. Office Live is essentially Microsoft-hosted SharePoint Server plugged into Live Hotmail. It's the most direct comparable to Live CRM, which really is hosted Dynamics CRM "Titan."

Complexity would appear to derive from approach, where Microsoft tries to do too much in a hosted service's client. Rather than pull complexity back to the server software—something Google does really well—Microsoft offers up too much stuff through the client. Hooks to existing desktop software create even more complexity and makes it harder for the service to make information available anytime, anywhere and on any device.

In a follow-up post, I will discuss the channel's role and why Microsoft's partner approach is a mitigating factor driving software plus services when emphasis should be more services plus software.

Related Posts:

• Live Lives, But How Well?, Microsoft Watch, June 27, 2007
• Why Google Succeeds, Part 2, Microsoft Watch, June 15, 2007
• Why Google Succeeds, Part 1, Microsoft Watch, June 15, 2007
• Microsoft MIXes It Up, Microsoft Watch, April 30, 2007
• The Google Quandary, Microsoft Watch, April 24, 2007
• The Google Problem, Microsoft Watch, May 31, 2007
• Who Pays for Software Plus Services, Microsoft Watch, March 15, 2007
• Tell Me What?, Microsoft Watch, March 14, 2007
• Google Catfight About 30 Years in the Making, Microsoft Watch, March 6, 2007
• What Is Microsoft's Services Platform?, Microsoft Watch, March 1, 2007
• Why Google Matters to Microsoft, Microsoft Watch, Feb. 22, 2007
• Google and Long Tail Computing, Microsoft Watch, Feb. 22, 2007
• Why I Killed Office Live, Microsoft Watch, December 29, 2006