The Internet Services Puddle


What Ray Ozzie’s strategic memo really says.


Ever the master of public relations, Microsoft has always been able to figure its way out of a tight spot with the use of a judiciously leaked memo.

Remember when AOL merged with Netscape back in 1998? Time to take a leak. Remember 2000, when Symbian was stealing the thunder from Microsoft’s cellphone strategy? Time to take a leak. Remember when the antitrust settlement talks had hit a sticky patch? Time to take a leak. Remember when Microsoft’s security woes finally became an issue? Time, once again, to take a leak.

The purpose of these releases is to bolster morale and focus the staff – Microsoft always seems to need a No.1 Enemy – and inform the press that it’s on the case.

(The memos Microsoft doesn’t want you to read such as this one and these two, are always more entertaining and enlightening.)

And so it goes. We know you’re very busy people, so in the spirit of the excellent 500-word “digested reads” offered by some of our better newspapers, we give you the précis of the latest Gates and Ozzie memos.

Then we’ll put the whole affair in some historical perspective.

From: Bill Gates

Sent: Sunday, October 30, 2005 9:56 PM

To: Executive Staff and Direct Reports; Distinguished Engineers; All TV, print, radio and internet news outlets; All bloggers [delete last five before release]

Subject: Internet Software Services

Microsoft has always had to respond to innovators in the software business and seize the PR initiative.

Ten years ago this December, I wrote a memo entitled The Internet Tidal Puddle in which I attempted to undo the damage caused by my book, The Road Ahead, published just three months previously.

In The Road Ahead I failed to mention the internet at all. The same month, Netscape had floated on NASDAQ, creating the largest ever first day gain. Clearly, there was a puddle in the road ahead. So in my memo I warned that we could either step round the puddle, or step right into it, and risk being drowned.

In 1995 none of our products made use of TCP/IP. Now, a decade later, I can safely say that many of them do.

In 1995 I warned that we risked losing the mindshare of a new generation of internet software developers who chose to shun Microsoft APIs completely. Now, a decade later, I can say that close to 100 per cent of Internet-born viruses, Trojans, rootkits and worms use Microsoft APIs exclusively.

However, to lead we need to do far more.

In order to execute on this opportunity we must look as if we’re acting quickly and decisively. Recently competitors [Steve, chair down. DOWN.] have gained massive public attention by rolling out products that remain in beta for many years. This is unacceptable. Products that remain in beta for many years should be first and foremost, in the public’s mind, Microsoft products.

For three months Ray Ozzie has been sitting in his orgone accumulator devising a strategy to ensure we can execute. I’ve attached a memo written by him that I think strikes the right balance between pre-announcement and non-delivery. I’m happy to share it with you.


To: Executive Staff and direct reports all press

From: Ray Ozzie Date: October 28, 2005

Subject: The Internet Services Puddle

Bill – For the main strategy section I don’t have anything new to add that hasn’t already been articulated by our own Chairman and Chief Software Architect.

[ Excellent! See, Steve? This is why I hired him – billg ]

So I suggest shaking down the “seamless connected information at your fingertips” stuff from 1990, adding in some of the loosely coupled web services patter from the 2000 launch. Mention blogs and wikis. No one will notice. For the Journal, insert something critical, for example “It can be argued that Microsoft Plus Pack! For Windows 95 was not the basis for our multimedia strategy that we once though it would be”. I’ll have my people highlight this in flashing yellow text for the press leak.

Now for the actionables. I have an old Notes macro that can I expand. A comprehensive plan of action follows:

  1. @DELEGATE: I am working with the division presidents to assign, by December 15th, “scenario owners” – a role intended to improve our execution of key services-based initiatives through leadership. These leaders will provide an outside-in perspective in mapping out and communicating specific market objectives, while at the same time working with developers and others at the detail level to ensure expedient decision making and continuity. These individuals will be responsible for driving critical decisions such as feature re-prioritization and cuts while appreciating the business tradeoffs and impact of such decisions. They’ll listen. They’ll rapidly effect changes in plans to ensure execution and improve agility, even for scenarios that span divisions. Initial scenarios to be assigned ownership will include the seven seamless experiences described earlier.
  2. @MEETINGS: Beginning in January these individuals will work with me and with product groups to concretely map out scenarios and pragmatically assess changes needed in product and go-to-market plans related to services and service-based scenarios. For some groups this will impact short-term plans; for many others on path to shipping soon, it will factor significantly into planning for future releases.
  3. @MOREMEETINGS: All Business Groups have been asked to develop their plans to embrace this mission and create new service offerings that deliver value to customers and utilize the platform capabilities that we have today and are building for the future. We expect both technical and non-technical communities to be increasingly engaged on the topic of services and service-enhanced software. As we begin planning the next waves of innovation – such as those beyond Vista and Office “12” – we will mobilize execution around those plans.
  4. @BLOGBLOGBLOG: I have created an internal blog that will be used to notify you of further plans as they emerge. There, I’ll point you to libraries of documents that you will find interesting to read, and I’ll be experimenting with ways that you can directly engage in the conversation.

So there you have it. Those last four paragraphs are not from a random buzzword generator, or from the Dilbert cartoon, but from Ozzie himself. It’s a dramatic call to inaction.

The Sleeping Giant has stirred – and gone back to sleep.

Now a poser for you. Does anyone doubt that in 2015, Microsoft, Google and Yahoo! will not still be with us? They will surely be as much a part of the landscape in ten years time as the heads on Mount Rushmore. This makes today’s carefully leaked “strategy” statements rather moot.

But in ten years time, will computing as a utility be with us, too?

Here’s a prediction from yore:

“If computers of the kind I have advocated become the computers of the future, then computation may someday be organized as a public utility. We can envisage computing service companies whose subscribers are connected to them by telephone lines…

“The system could develop commercially in fairly interesting ways. Certain subscribers might offer services to other subscribers. One example is weather prediction. A weather-predicting company that is a subscriber to the a central computer predicts the weather but keeps the predictions in its private files. If you subscribe to its service, your programs can gain access to those files. You may even have weather predicting programs run for your benefit to answer your own particular questions… Other subscribers might furnish economic predictions. The computing utility could become the basis for a new and important industry.”

That was MIT’s John McCarthy in 1961 – 44 years ago. The waiting is just killing me.

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