Gates Foresees Massive Shift in Tech Future
The technology industry’s shift to Internet-based software and services represents a massive and disruptive “sea change,” Microsoft Chairman Bill Gates wrote to top-level executives in a memo aimed at rallying his troops against the new competitive threats the company faces.
In an e-mail to top executives, dated Oct. 30 and obtained Tuesday by Associated Press, Gates urged company leaders to “act quickly and decisively” to move further into the field of offering such services to best formidable competitors. But he also warned that the company must be thoughtful in building the right technology to serve the right audience.
“This coming ‘services wave’ will be very disruptive,” Gates wrote. “We have competitors who will seize on these approaches and challenge us -- still, the opportunity to lead is very clear.”
Gates compares the push toward such services -- including online business software offerings and free Web-based e-mail -- to the changes he saw nearly a decade ago. Then, he wrote a now-famous memo, called “The Internet Tidal Wave,” that prompted a massive shift at Microsoft toward Internet-based technology.
“The next sea change is upon us,” Gates wrote to executives.
Gates included a memo from Ray Ozzie, one of Microsoft’s three chief technical officers, which outlined ideas for broad companywide changes that could address the growing competitive threat.
In that memo, dated Oct. 28, Ozzie concedes that Microsoft has not led the pack on Internet-based software and services and now faces intense competition from companies such as Google Inc. Ozzie said Microsoft needed to focus on key tenets of the new model, including a shift toward offering free, advertising-supported offerings and more sophisticated, Internet-based methods of delivering products.
“I believe at this juncture it’s generally very clear to each of us why we need to transform -- the competitors, the challenges and the opportunities,” Ozzie wrote.
Last week, Microsoft announced plans for Windows Live and Office Live, two Web-based offerings that aim to help the company compete with Google, Yahoo Inc., Salesforce.com and other companies that are already seeing success with such Web-based offerings.
Microsoft has faced criticism that its model, which still relies mostly on delivering software in traditional packaging, could grow antiquated. The concern is that as more companies offer online services such as word processing and photo storage, there will be less of a need for Microsoft’s lucrative Windows operating system and Office business software.
Microsoft’s nascent Windows Live and Office Live efforts aim to complement its software franchises with online products that build on what people find on their desktop computers.
