1. Microsoft’s Future Online

For the third year running, Microsoft used its MIX conference in Las Vegas to talk about what it thinks the future of the Web will be, from ad-funded services and rich applications, to mobile browsing and the next version of Internet Explorer. There were hints about future services, a frank confession that Microsoft wants Yahoo! to make money out of ads to pay for those services, a chance to try out Microsoft Surface, and arguments about how open Microsoft is. Steve Ballmer painted Microsoft as the underdog in Web search today, but also “the little engine that could, working away, working away, working away”. So where exactly is Microsoft working away, and does it make a good mix of software and services for the Web future?

A Mesh of Devices – Paid For By Ads

The big news of MIX was software. The first beta of Internet Explorer 8. The first beta of Silverlight 2—moving from a video streaming plug-in to a way to build Internet applications that work on Windows, Mac and eventually Linux and smartphones. The first beta of Expression Studio 2—Microsoft’s Web development and design suite for building Web sites and applications, not with PHP—plus a preview version of Expression Blend 2.5 for creating Silverlight 2 apps and a bundle with Parallels for Mac users. And while the preview of Microsoft SQL Server Data Services sounds like something only businesses and developers will care about, it’s not just Microsoft’s answer to Amazon’s S3 online storage service. It’s the first part of Microsoft’s cloud computing strategy to synchronize devices, content and services, what Ray Ozzie hinted at when he repeatedly talked about a “mesh” of social connections and devices using the Web as a hub, and promised key software and services releases by the end of this year.

Ray Ozzie talked repeatedly at MIX 08 about a mesh of devices and connections.

Some of Microsoft’s most important server applications are going to be available as services that Microsoft will host for companies that don’t want to run servers themselves: Exchange, SharePoint, and Office Communications Server. Put those together with the Sync Framework, due by this fall, that lets developers synchronize data between applications and devices (including PCs and Windows Mobile phones) and you get something close to the rumored Microsoft Horizon service—it will synchronize feeds of information among your desktop, notebook, phone and Web applications.

Think of it like an RSS feed for files and folders; Ozzie said it might also let devices report their status and location, and let you configure and personalize a new device or access files and apps remotely. Don’t expect Windows to go away, or Microsoft to put all the features of applications like Office onto the Web. Instead, Ozzie promised a mix of “the rich dynamic editing of the PC; the mobility, note-taking and capture capabilities of the phone; and the work-anywhere ubiquity of the Internet, all connected into a seamless experience using the Web more or less as an experience hub.”

If the record labels and movie studios agree, you’d be able to share music and video among different devices, he suggested. “Building upon this same vision of the device mesh, it’s our aspiration that individuals will only need to license their media once, to organize their subscriptions and collections once, and to use any of their devices to access and enjoy their media, whether on the Web, on the go, in the living room, or on the desktop. “

Those are services you might have to pay for, but if Microsoft does manage to buy Yahoo!, they might be free with ads. Microsoft wants its share of the $80 billion that online advertising should be generating by 2011; according to Ozzie, “advertising is going to continue to be the primary way that we and you monetize services and apps of all kinds of the Web”. Ballmer said ads “will be the next super big thing,” search matters because it’s where the ads are, and Facebook is interesting for the same reason. “We have to have a strong position in online search if we’re going to be a serious player in online advertising. There are 100-whatever N searches per day, and I want a larger percentage of those searches made with our stuff, and our ads being served up, than we have today by quite a measure.”

On the one hand, he admitted that Microsoft is doing badly with search and needs Yahoo!. “We’ve got a long way to go. And Yahoo! seems to be a way to accelerate that because of the critical mass that’s required to really compete.” But on the other hand, he dismissed Google as a competitor in areas other than search. “In our desktop business today, we don’t see Google. We see Apple, we see Linux, we don’t see Google… We’ve got a real business in entertainment and devices, with Xbox, with Windows Mobile. Google, again, is really not present, although they’re an aspirant with YouTube, and they’re certainly an aspirant with Android, but we’ll see.”