Microsoft fleshes out its online services strategy

Microsoft has come back down from the clouds and fleshed out the technical details of its online services strategy which will change the nature of its relationship with its customers.

Speaking at the software company's Financial Analysts Day, Chief software architect Ray Ozzie described in detail the work he has led on the so-called "Cloud" Internet services.

During the next 12 to 18 months, Microsoft will introduce software and hosted services designed to enhance its current product line and derive more revenue from advertising-supported Web services, Ozzie said.

Echoing comments he made in an interview earlier this year, Ozzie said that Microsoft is preparing a multi-layered platform designed to build and run web-based services or on-premise software coupled with services.

This platform will be made available to business partners, consumers, business customers and software developers. It is part of the wider industry shift from software to software-plus-services, Ozzie said.

"We are the only company with a platform DNA to viably deliver this kind of highly leveraged platform approach to services and we're certainly one of the few companies that has the financial capacity to capitalise on this sea change," he said.

At the foundation of Microsoft's services architecture is what Ozzie called Global Foundation Services, the managed computing gear at Microsoft's datacentres that run Internet applications.

Next he referred to Cloud Infrastructure Services, the software tuned for utility computing, where outsiders can purchase computing resources as needed.

Cloud Infrastructure Services is "a utility computing fabric" on which online services run, Ozzie said. "It has an efficient, virtualised computing layer application framework that supports different application models for horizontal scaling, the infrastructure for automatic deployment of services [along with storage of different types of data].", It will also have network services software for serving up information to people over the Internet.

Live Platform Services, the next layer, is a set of largely consumer-oriented services, such as verifying a person's username and password, social-networking services and other communications-oriented tools. Microsoft's AdCenter ad-service software will be part of this suite of services.

Ozzie said Microsoft is designing this infrastructure so that consumers can access online services from a range of devices, including its Xbox gaming device, PCs, its Zune digital music player and phones.

Microsoft can also analyse consumer online behaviour coming from its datacentre for more targeted advertising, he added.

For business customers, Microsoft's strategy is to offer enterprises a choice of either on-premise software, Microsoft hosted services such as outsourced e-mail, or hosted services from Microsoft partners.

Enterprise customers could contract with Microsoft for utility computing-like services, where they would essentially rent computing power or storage capacity to meet anticipated spikes in demand, Ozzie said.

Ozzie stayed clear of making specific product announcements except to say that his goal is to encourage every software developer at Microsoft to add an online services components to all its products.

"The biggest services opportunity is a services relationship to our classic software products," he said.