Microsoft’s Ozzie declares end to PC era

ft.com
By Richard Waters in Redmond
Published: July 27 2006 23:37 | Last updated: July 27 2006 23:37

Microsoft’s new top technology visionary on Thursday declared an end to the PC era as the software company made its latest attempt to deal with the threat to its traditional business from the rise of the internet.

Ray Ozzie, who took over the title of chief software architect from Bill Gates last month when the Microsoft chairman announced his plan to leave the company in 2008, laid out a vision for the company in which internet-based services, rather than PCs, lie at the centre of its worldview.

“In a previous era – in the PC era – Microsoft would naturally begin with a PC mindset,” he said at the company’s annual analyst and investor meeting.

“We’re in a new era – an era in which the internet is at the centre.”

While deeply impacting Microsoft, this “fundamental and transformational shift to services” was also about to “turn the technology industry on its head”, he added, forcing other companies to reconsider their businesses.

Mr Ozzie’s comments mark an attempt to accelerate the third, and most far-reaching, company-wide push by Microsoft to deal with the rise of the internet. Early victory in the Browser Wars against Netscape in the late-1990s was followed five years ago by a move to rewrite all its software to connect up over the internet under a sweeping initiative known as “Dot Net”.

However, the rise of Google, as well as successful internet-based services such as Apple’s iTunes, have forced the company to move faster. That has contributed to a jump in costs that has dented Microsoft’s share price in recent months.

While applauding the services vision outlined by Mr Ozzie, Rick Sherlund, software analyst at Goldman Sachs, added of Microsoft’s efforts: “They’re never as fast as you’d like.”

However, he said online services were likely to represent a new business opportunity for Microsoft, with little immediate risk that it would cannibalise the company’s existing PC business.

Mr Ozzie’s reference to the post-PC era came at the first Microsoft annual analyst meeting that Mr Gates has not attended. The Microsoft chairman, who has always denied suggestions that the PC’s dominance of the tech industry was receding, was in Africa on a long-planned vacation, the company said.

The new Microsoft software strategist laid out a plan that puts Windows Live, a new group of online services that includes its e-mail, search and other main internet-based services, at the centre of its business.

Comprised both of rebranded services that used to operate under the MSN name, as well as new services, Windows Live would become “the hub” through which Microsoft delivered all the technology-driven experiences that users valued, he added.

Meanwhile, the company said it would launch its first portable music player under the new Zune brand name in the US this year as it seeks to win back lost ground from Apple’s iTunes music service.