GigaOM Interview: Ray Ozzie, Chief Software Architect, Microsoft Corp.

bio_ray.jpgFresh from his Mix’08 keynote, Microsoft’s Chief Software Architect and industry luminary, Ray Ozzie, spent some time on the phone with me, discussing everything from the company’s services strategy, to the economics of cloud computing, to the relevance of desktop and infrastructure challenges. What follows is a highly edited version of our 20-minute conversation.

Enjoy this interview, the first of what I hope will become a series of conversations with tech greats.

OM MALIK: You outlined Microsoft’s software-plus-services strategy, but what I want to know about is the changing role of the desktop in this service’s future.

RAY OZZIE: I think the real question is (that) if you were going to design an OS today, what would it look like? The OS that we’re using today is kind of in the model of a ’70s or ’80s vintage workstation. It was designed for a LAN, it’s got this great display, and a mouse, and all this stuff, but it’s not inherently designed for the Internet. The Internet is this resource in the back end that you can design things to take advantage of. You can use it to synchronize stuff, and communicate stuff amongst these devices at the edge.

A student today or a web startup, they don’t actually start at the desktop. They start at the web, they start building web solutions, and immediately deploy that to a browser. So from that perspective, what programming models can I give these folks that they can extend that functionality out to the edge? In the cases where they want mobility, where they want a rich dynamic experience as a piece of their solution, how can I make it incremental for them to extend those things, as opposed to learning the desktop world from scratch?

OM: So basically you’re saying that in this new environment, that you have to give up on your legacy of desktop and just view the world from a web perspective?

RAY OZZIE: Well, I can’t say give up on it. Here’s the way I talk about it to people at Microsoft. The desktop is very useful. People use it a lot on a daily basis. There are things that the web is good for, but that doesn’t necessarily mean that for all those things that the desktop is not good anymore. What I think is important is to re-pivot the center of what we are trying to accomplish.

OM: What makes you guys think that you can actually do better than everybody else?

RAY OZZIE: I’m not going to get cocky. The reason I’m a believer is that Microsoft as a company is in a number of different markets. I think we’re well positioned, because we have a selfish need to do these things, and because we have platform genetics. We have the capacity to invest at the levels of infrastructure that are necessary to play in this game. So I think we’ll be well positioned.  I can’t tell you specifically which aspects we’re going to kick somebody else’s butt, or where they’re going to kick our butt, but I think we’re pretty well positioned.

OM: I buy into the whole services model, but then I see what happened a couple of weeks ago — Hotmail goes down for quite a long time. And this happens way too often, not only just at Microsoft, but at other services also. It is very hard for me to imagine, we keep talking about services, but the reliability of the infrastructure is just not there.

RAY OZZIE: It’s not straight engineering, and it’s not an art. It’s somewhere in-between. And we are all learning. And so if you look at the innards of a Yahoo or a Microsoft, an MSN, or a Google, you will see the people who have designed the systems and have taken a number of the things we’ve learned in the enterprise space. We have to throw them them away, because the way that we did it in the enterprise space was more tightly coupled. We need to be more loosely coupled.

So I’m not going to make any excuses for downtime. We need to develop more and better application design patterns that we give to developers that let them develop mesh-oriented apps at birth, horizontal apps that can suffer massive failures of certain aspects of their infrastructure, while still surviving.

OM: It (mesh-oriented apps) sounds like a great idea, but in reality can we actually deliver that kind of a mesh app architecture, and how soon?

RAY OZZIE: I think that you’ll see is over the course of this year, to 18 months, you’ll see the incumbents and startups, both, do their first big volleys of services platform, apps tools, runtimes, various things. It really isn’t being taken seriously right now by anybody except Amazon. They’ve done the world a service by putting out there some fairly provocative, interesting services.

OM: The costs of computing, hardware and bandwidth are dropping quickly. Do you believe that the cost will come down fast enough to make cloud computing actually a profitable business?

RAY OZZIE: Well, it’s unlikely that we would get into it if we didn’t think it was going to be a profitable business. So we’ll just manage it to be profitable. It’s going to have different margins than classic software, or the ad (-supported) business. But, we have every reason to believe that it will be a profitable business. It’s an inevitable business. The higher levels in the app stack require that this infrastructure exists, and the margins are probably going to be higher in the stack than they are down at the bottom.

OM: Can you actually elaborate a little bit on that, like when you say higher in the stack, what precisely do you mean?

RAY OZZIE: Let’s go all the way up. Let’s stick to boring old enterprise, all the way up at business solutions, HR apps, or things like that. Somebody who is selling those apps is going to build in, more than likely, the underlying utility costs within their higher-level service. It will still be cheaper to do those things on a service infrastructure than it is on a server infrastructure, but the margins will still be higher to people who build solutions that customers understand the business value of.

When you go down to selling bandwidth, or selling MIPS there will be competition at that level. So the margins, at generic commodity levels are going to be substantially lower.

OM: When do you think utility computing can be a profitable business; are we’re looking at like maybe two years, four years out before it actually starts to become a profitable entity?

RAY OZZIE: (Let’s) take (one company) who is in the market today: Amazon. They chose a price point. There are either customers at that price point or not. They may have priced themselves at expected costs as opposed to actual today costs, but it doesn’t really matter. They could have brought it out at twice the existing price and there still would have been a customer base, and they’d be making money at birth.

I think all of these utility-computing services, as they’re born will either be breaking even or profitable. At the scale that we’re talking about, nobody can afford, (even Microsoft) can’t afford to do it at a loss. We could subsidize it, I suppose. Google could subsidize it by profits in other parts of their business, we could subsidize it, but I don’t think there’s any reason that any of us in this world would bring out that infrastructure like this without charging for what we’re paying, and then trying to make some profit over it. The cost base is so high in terms of building these data centers you do want to kind of make it up.