Microsoft: Google Was 'Wake-Up Call'
Ray Ozzie says Microsoft will answer with plans that more than mimic its rivals successes.
(Seattle) Watching Google Inc. rake in advertising revenue "was
a wake-up call within Microsoft," the company's top technical executive,
Ray Ozzie, said Tuesday. But he said Microsoft plans to do more than simply
mimic Google by rolling out Web-based versions of desktop programs or
following its particular search and advertising model.
Ozzie, who has only made a handful of appearances since his promotion
last June to replace Bill Gates as chief software architect, told analysts
and investors at a Goldman Sachs conference in Las Vegas that he has been
laying the groundwork for programmers across the company to build Internet-based
"There is a sea change going on in the industry," Ozzie said.
In a question-and-answer session broadcast over the Internet, he likened
the current shift to the way the PC era that took off in the 1980s marked
a move away from centralized mainframe computing.
But Microsoft has yet to offer a cohesive package of programs that run
over the Internet instead of from a PC. Ozzie gave little indication of
what might be coming, or when. Meanwhile, Google has expanded beyond searches
to offer free, Web-based programs similar to Microsoft's mainstays, Word
Ozzie said Word, Excel and other parts of Microsoft's "Office"
suite have weathered threats from both desktop and Web-based programs
in part because competitors always compromised functionality. For example,
he said, users always have to be connected to the Internet to use a Web-based
Instead of jumping belatedly into the fray with Web-only programs, he
said Microsoft will pursue a mix of software loaded on PCs and Internet
services that also work with the growing array of mobile devices, a strategy
he called "software-plus-service."
He said he sees free, Web-based, ad-supported software as a way to extend
Microsoft Office's reach, but gave no specifics. He noted that this solution
wasn't likely to appeal to the company's big business customers.
Sid Parakh, an analyst with McAdams Wright Ragen in Seattle, said that
"what he's trying to say is that even though we are behind, we are
not going to necessarily copy a model that's out there."
In the U.S. search market, Microsoft is stuck firmly in third place behind
Google and Yahoo Inc., according to January data from research group Comscore
Networks Inc. Right now, Ozzie said, people rely on general Web search
engines for all types of queries. Under his leadership, Microsoft is betting
that Internet users will want search capabilities built into all the different
places they spend time, from video game community sites to the Outlook
e-mail and calendar program.
He pointed to the software maker's acquisition on Monday of Medstory
Inc., a health search engine, as an example of Microsoft's plan to offer
targeted groups of Web surfers to advertisers.
Parakh said the Medstory acquisition was solid. "Advertisers do
want a targeted audience," he said. If Microsoft can deliver it,
"I don't see a reason why advertisers won't move."
Microsoft shares were down $1.20, 4.1 percent, to $27.87 on the Nasdaq