5 Questions for Mary Jo Foley, "Microsoft 2.0"

Despite the marked shift to Web software, Microsoft remains a dominant technology company and one of the biggest, most profitable firms in the world. The firm just made some of its first significant product direction announcements since Bill Gates officially left in late June. Who better to ask about the company than Mary Jo Foley, who has followed the company for the better part of 25 years, and this year published "Microsoft 2.0: How Microsoft Plans to Stay Relevant in the Post-Gates Era"

Big Think: You start one of your chapters with a quote from Time magazine saying that the technology industry no longer needs Bill Gates. Do you believe that?Foley: No. Microsoft is going to be weaker without Gates than they would be with him staying. There's so many people at Microsoft who really looked up to Gates, and really did things because of Bill Gates, were at the company because of Bill Gates. It's going to be interesting to see if [chief software architect] Ray Ozzie can step up into the role that they've laid out for him.
Big Think: You're fairly critical of Ozzie in the book. Ozzie was front-and-center at Microsoft's recent developers' conference, rolling out, among other things, Azure, the basis of Microsoft's new push into Web software. Has he stepped up?
Foley: I think Ozzie has taken a half-step up. He talked to a lot of media at the PDC [Professional Developers Conference]-- which is a big shift for him. He also seemed a little more comfy in his keynote than in previous keynotes. But I still feel as though he has a long way to go to be seen as the public tech face of Microsoft. And I am still not 100% convinced he wants to be in that role. I feel as though he'd still be way happier tinkering with code deep in the labs at Microsoft than in managing people, let
alone nearly 100,000 of them.

Big Think: Given what you've seen in the last few weeks, is Microsoft on the right track?

Foley: Windows 7 -- even at the pre-beta "M3" stage it's currently at -- fixes a lot of what's wrong with Vista. It's more solid, seems to be faster, looks like it will boot more quickly and allegedly will be less of a battery hog. So that's a positive. Plus -- believe it or not -- it's tracking to be released to manufacturing by mid-2009 (even if MS is publicly denying this to cover its butt).

On the cloud front: They have acquiesced to folks claiming Google Docs/Apps is a threat to a degree and are planning to deliver a "Web-based Office 14." They are still going to focus most of their efforts on the PC-based Office 14, however, and I'm expecting there will be a bunch of limitations to what the Web-based O14 will be able to do, so they won't cannibalize their own sales. And though a lot of their cloud platform is more slideware than reality at this point, it sounds like they know what they have to build to compete with Amazon and Google in this space.

The one story I think is still confusing is how Live Mesh really fits in with Microsoft's overall development and cloud story; I get it on paper, but feel like it's almost as though they discovered they were building two different cloud platforms and kludged them together on a slide to make it look as though they had a unified strategy. It's still early days for Microsoft and the cloud, though.... so we'll see if and when developers start trying to build with the tools/platforms Microsoft is providing.

Big Think. What's your perspective on Microsoft's threats and its ability to respond to these?
Foley: With its Software + Services strategy, Microsoft has found a way to stick a toe in the utility computing/cloud computing waters without killing off its existing cash cows, like Windows, Office and other on-premise software. The areas where I think Microsoft has the highest hills to climb, vis-a-vis its competitors are mobile (where the HECK is Windows Mobile 7? or even 6.5, for that matter?); search (they're still stuck at under 10% total query share, and are claiming publicly they aren't going to rebid for Yahoo); and the retail PC market (there's only so much they can do to "force" their PC maker partners to stop bundling crapware -- something Apple doesn't have to contend with). It's not surprising that Steve Ballmer is personally heading up the platforms and services businesses at the company right now, as these are where the company has to fix a lot of broken/half-baked strategies.

Big Think: Do you think Ballmer is the right guy for the job?
Foley: I'm a big Ballmer fan. Who else could do the job? Microsoft is a culture -- and I talk about this a little bit in the book â€" that is horrible with outsiders coming inside. Even if Microsoft started losing a ton of money, I still see them betting on him, because he is now the closest thing they have to being the epitome of Microsoft.