Departing Microsoft Chief Software Architect Ray Ozzie apparently crawled out of a hole this week, saw his shadow, and then issued another strategy memo for the troops. Dubbed "Dawn of a New Day," the memo briefly looks back over the five years of Ozzie's tenure, then launches into general thoughts about the direction he believes Microsoft should take in his absence. There's just one problem: Isn't this the same memo he penned five years ago?
Ozzie's arrival at Microsoft was also accompanied—if you don't mind playing with the timeline a bit—by a memo. That one, called "The Internet Services Disruption," is credited with pushing Microsoft more fully toward cloud computing and away from the traditional software-distribution methods of the past. Ozzie's initial memo has been repeatedly compared with the infamous Bill Gates memo, "The Internet Tidal Wave," which triggered Microsoft's move to the Internet (and, it should be noted, to antitrust disasters on three continents). The comparison was deliberate and explicit and was designed by Microsoft to show that Ozzie had the visionary chops to succeed Bill Gates, who was Microsoft's original chief software architect.
After five years of virtual silence, Ozzie is eager to prove that his vision for cloud computing has borne fruit at the software giant. "At this point, we're truly all in with regard to services," Ozzie writes in his latest memo. (And yes, the emphasis there is his.) "I'm incredibly proud of the people and the work that has been done across the company, and of the way we've turned this services transformation into opportunities that will pay off for years to come."
Ozzie cites products such as Windows Live, Office 365, Xbox LIVE, Bing, and Windows Azure and SQL Azure as proof that Microsoft isn't just addressing the future but leading the way. And Ozzie is taking credit for jumpstarting it all. "Inspired by little more than a memo, a few decks, and discussions, intrapreneurial leaders stepped up to build and deliver an innovative service that, while still nascent, will over time prove to be transformational for the company and the industry," he wrote. (Yes, "intrapeneurial." It's a big company.)
But at its heart, this new memo is simply a reiteration of Ozzie's original memo, suggesting that at the core, little has changed for Microsoft over the past five years. He speaks of "agile innovation" from Microsoft's competitors—not named, but based on the markets he cites, he clearly means Apple and Google, at the least. And he very specifically discusses the "Post-PC" world, a world that those very competitors are already embracing, for obvious reasons.
Noting that November 20 is the 25th anniversary of the launch of Windows 1.0, Ozzie says it's time for Microsoft to move on. The PC model is too complex, he says, "suck\\[ing\\] the life out of users, developers, and IT." In very strident and passionate terms, Ozzie argues that Microsoft's biggest strength—the longevity of Windows and its surrounding ecosystem—is indeed its biggest weakness. It's an argument that's been made again and again, but never by the person most directly in charge of Microsoft's software vision.
According to Microsoft insider and analyst Matt Rostoff, many at the software giant viewed Ozzie's "self-congratulatory" memo as "a slap in the face." Echoing my own opinion of Ozzie, Rostoff writes, "A lot of them wish he'd been more visible over the years. \\[One employee\\] likened Ozzie's departure to a political assassination, and saw this memo as a kind of a slap on his way out the door."
But here's the problem. Today, Microsoft derives 28.5 percent of its revenues from Windows (and a further 24 percent and 30 percent from its Windows Server and Office divisions, respectfully), whereas only a tiny 3.5 percent of the company's revenues come specifically from online services. Thus, over 82 percent of the revenues Microsoft makes come from its three core product lines—product lines that Ozzie says are on the way out.
Now, he does also mention that each has made some transition to the future. Windows includes Windows Live, for example. Office is moving to the cloud with Office Web Apps and Office 365. And Microsoft's Server division includes the Windows Azure and SQL Azure software services platforms. But it's an important point that the money, at least for now, is all coming from old-school software products, not these new services.
Microsoft faces a tough decision going forward, but it has the seeds of success planted already. Yes, the client and server versions of Windows have grown big and complicated, but pushed to the brink in the mobile market, the company proved it could start over from scratch—and successfully—with Windows Phone 7. So, while Apple is busy pushing its iOS platform to a multitude of devices and even to its traditional Mac OS X operating system, perhaps Microsoft could plot a similar reversal and start over with platforms that are both simpler and more elegant.
Starting over is difficult, and of course in Microsoft's case it was a non-issue since the established platforms were almost always—and still are, by the way—selling in ever-bigger record numbers. But Ozzie seems to be suggesting that Microsoft has pushed its existing platforms as far as they'll go. And if it doesn't embrace the future now, willingly, it will be forced to do so in the near future, unwillingly, as it was in the mobile market.
As it turns out, I actually agree with this supposition. In fact, I've been making this argument for years. That it's arguably the most important message Ozzie has yet communicated to the troops would perhaps mean all the more if he intended to stick around and guide the company's next transition. Starting over with a losing product is one thing. Starting over with one that is dominant is quite another. Who, I wonder, would possibly lead such a charge at Microsoft, a company so bogged down by political infighting and bureaucracy that it sometimes can't seem to do anything at all?
Apparently not Ray Ozzie.