JamieG Analysis

Recent trends developing between the big IT players, Google and Microsoft, are starting to paint a very interesting picture.  At PDC, Microsoft recent developer conference, they have announced Azure.  What is Azure? Well, it is Microsoft answer to Google and the future business model to carry Microsoft forward in a future where operating systems and developer tools are free and abundant.  Vista doesn’t matter any more.

To help explain my point of view, lets look at some trends we have direct experience with.

Google Apps; this is hurting Microsoft more then they are willing to admit.  My company, and many I know, have stopped using their Exchange servers, and opened up a free Google Apps account.  They couldn’t be more happy.  They may be loosing some functionality, but in real terms those features are not in common use, and other free online services exist to fill in some of the gaps.  Google Apps also needs far less CPU power (less $$) and is inherently mobile as it works on any web terminal.  The need for a Windows PC to run Outlook is removed. Users are free to use the operating system of choice, be it XP, Vista, MacOSX or linux.

Google appears to have the future vision of online services in good focus.  Chrome Browser is Google’s attempt to speed up the “Browser as an OS” future.  Chrome was a direct shot over Microsoft bow. Azure, is Microsoft’s volley, and it is not a warning shot like Chrome was.

Microsoft realises that dominance of the OS market is going to be a short term future.  End users have realised that they do not need to purchase the bigger and faster system every few years.  Computers are fast enough to do what they need, and have been for years now.  The push of more complex operating systems and eye catching graphics does little for productivity.  Linux is really starting to  evolve into a reasonable desktop OS, while XP is all users really need. OSX is showing its superiority as sale indicate.  XP is being sold for  a fraction of its original price just to complete on the netbook PC market and the growing Linux base.  Microsoft needs to keep this base small, otherwise it will reach critical mass, and hard ware makers will see a reason to spend some money developing it to XP feature set.  Then its all over for XP/Microsoft in many ways.

The open source movement just keeps moving on slowly, as such, it will eventually break Microsoft and other commercial Operating systems as the dominant OS for general use (Web, Email, IM).  It is simply inevitable.  As such, Microsoft needs to start positioning itself now for that future.

And what is that future?

Online services.  Look out if you are a small data centre. Microsoft is heading into your business space.  Data centres are big users of Microsoft product and the yearly maintenance, Microsoft needs to build in value and take over this market to replace that which is going away.

This is an important time as Linux has been kicking huge goals in the Application server market.  Google is completely based on it.  So is Yahoo.  If IT services is one of the last profitable areas, then Microsoft will want to own it. They really need to establish a fantastic developer platform and cloud computing service. If anyone can, Microsoft can.

This new platform means developers will be developing software to run on cloud computing systems. Defiantly the future.  Microsoft wants developers to make these tools as so they run on their cloud technology, and as such, keep Microsoft receiving yearly fees from every business.

It comes down to.. If you cannot make money on the sale of the development tools and the software, make the money on something they have to pay for, even if they are using free/open source software.  The cloud infrastructure it will live on.  Services are immune to free software and development tools.

Finally, lets look at the offering.  The killer app here from Microsoft is going to be Silverlight. Google, Yahoo are pushing javascript based interface engines, however, neither of them have a platform that is as advanced and capable as Silverlight.  Adobe Flex/Flash is out there, but does not appear to have traction with the big players as a future Cloud development platform.

Lets get this straight.  Javascript based internet applications are NEVER going to be as capable as, for example, Native Microsoft Word.  However, Silverlight will get it much closer then any other technology available now or on the road maps of other technologies. Flex/Flash a close second.  Javascript/AJAX frame works will probably archive very functional applications, but the polish and user interface speed will never match.

Many developers I know seem to downplay these issues.  I see this as short sightedness as natural evolution dictates end user will gravitate toards what is fast, nicer to look at when availble under the same conditions.

UPDATE: Last night Microsoft announced Silverlight based version of its Office suite including Outlook.  Major signs of the roadmap as descripbed above. Google watch out..  However, early reports are that the web version of Office apps will not be free, and you will need to have purchased the future Office release for access to online versions.  Obviously these apps will also become free as in google apps, but with limited features.  Google’s vision of online apps is simply to get control of the eyeballs and in general, the ads which they see.  This is why Yahoo was such an important purchase for Microsoft.  You need a effective way to monetise these eyeballs.  The purchase is probably still very much on the cards if we do not see Microsoft building that infrastructure themselves.  They will eventually purchase it. And yahoo is still the best option and now a very good buy at $12 down from the high $27 offer.