Internet Changes Everything

Microsoft's Ozzie opens up on Internet 'cloud' services

Microsoft's Ozzie opens up on Internet 'cloud' services | Tech news blog - CNET News.com

Posted by Martin LaMonica Microsoft Chief Software Architect Ray Ozzie provided a fresh take of the technical components at the heart of its online services push on Thursday. Speaking at the Microsoft Financial Analysts Day, Ozzie spelled out in greatest detail yet the work he has led on "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.

Microsoft chief software architect Ray Ozzie.

(Credit: Microsoft)

Echoing comments he made in an interview with CNET News.com
earlier this year, he said 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 all its customers, including
business partners, consumers, business customers and software
developers. It is part of the wider industry shift from software to
software plus services, he said.

"We are the only company with a platform DNA to viably delivery this
kind of highly leveraged platform approach to services and we're
certainly one of the few companies that has the financial capacity to
capitalize 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 data centers for running 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. It has an efficient, virtualized 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, Ozzie said. 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 user name 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 analyze consumer online behavior coming from its data center 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.

Corporations 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.

July 27, 2007 at 01:49 AM in Microsoft | Permalink | Top of page | Blog Home

Think Web 2.0 and think Microsoft? Not necessarily - Gates Interview Mar 24th 2006

Q&A: Microsoft chairman Bill Gates: Builder AU: Architect: At Work

The company has long provided the tools for building websites. But it's been a couple of steps behind when it comes to some of the bigger ideas and business models that have surfaced around web 2.0, such as advertising-based software.

In addition, Microsoft has long made devices - whether it's the PC, server or handheld - the centre of computing design. Now websites are becoming programmable, allowing people to "mash up" data from different sites.

To try to capture - and participate - in some of the buzz around web 2.0, Microsoft organised a conference in Las Vegas called Mix '06 aimed at web developers and designers. After his keynote speech at the conference on Monday, Microsoft chairman and chief software architect Bill Gates spoke to Builder AU sister site CNET News.com's Martin LaMonica about the push into hosted services, competition with Google and mobile computing.

Builder AU: A lot of the buzz and thinking around web 2.0 has come from outside Microsoft. Is this conference an attempt to get more involved there? And does that concern you at all?
Gates: Well, for the key new technologies that enable us to take the browser to a new level - DHTML, JavaScript, XML capabilities - we've been the pioneer.

If I'm a consumer or small-business owner, I could get a lot of applications in a hosted version, from project management to word processing. In that world of web applications, how do you make Windows Vista a must-have?
Well, Vista is probably more relevant now than ever because, as you're browsing, you want to download Active X controls and have a security framework in there. Having the kind of "reputation" services we built into Vista makes the community value more important: we know which websites are phishing websites. We know which controls people have had a good experience with. That kind of reputational value may be one of the biggest things people get out of Vista.

Likewise, the ability to download code and compartmentalise it - that's kind of a breakthrough that's come out of the fact that we're down the learning curve on security - way more than any other company - I can say 100 times as much. In the last three years, it's been our biggest R&D priority, and we've made breakthroughs.

Vista, in terms of rich media - people are doing movies more. People want to organise and find those things. They want to work offline as well as online. We picked the things where people want Windows to [work] better.

People are designing applications with the web in mind. In the past, you've been more Windows-centric with development tools. Will you be pointing developers to write applications where the web is the development platform?
The web is where a lot of code is being written, and you can go back to the year 2000 and the .NET initiative. .NET was designed to let people do state-of-the-art websites. In fact, .NET's success has been the primary platform for building websites. It's been quite phenomenal.

People are using other tools - around scripting, PHP and all that. But we've come in and really targeted that market. And as people do richer websites, we think the richness of what we've done there will go beyond the scripting-language-type approaches, which are fine. But more and more people will do sophisticated things. So there's nothing dramatic here, in the sense that the web just happened.

The web is evolving. There's a little bit more maturity now, in terms of business models with advertising coming in, with some of the late-90s' mistakes understood. But we're probably, as an industry, making some of those same mistakes. And that's OK. The ferment, the creativity, is incredible to see.

You've been talking about the web as a development platform for years. Internally at Microsoft, have you made the switch?
[Microsoft's] first company meeting around software as a service goes back over seven years now. We said it's a lot better for us and customers. Instead of viewing software as a one-time thing - you buy a new version, you're using that - if we have a continuous relationship [with] something like Watson, where we monitor what people are doing and the drivers they are using, Office Online can get templates and download new things.

It's letting our software innovation be more connected to the user, more customised to what they want. It's a great paradigm for us - to create new value. We did underestimate advertising, so an element of what we're doing there is catch-up.

There was a major demarcation when Ray [Ozzie] put out his memo last year, really saying the primary applications model will have everyone delivering through the web, monitored through the web, updating through the web. And many of these services, like storage or authentication, that you think of as Active Directory or SharePoint on premise - we've got to get those out [so people can] simply connect up to them. We're making great progress on that.

That's what makes this industry fun. Even Microsoft, with incredible research capabilities - the marketplace will come along and show us to put more into this and what is not paying off. We've got to be very dynamic. So far, throughout our history, our epitaph has been written 10 times, and so far, we're still alive. It's fun to see we're going through another one of those cycles.

And particularly, people think Google was born on this [web application] paradigm, and [are wondering whether] any of the traditional software companies understand and can actually push this paradigm. Here at this conference, clearly, we're saying we've got the best tools for this paradigm, and we want to know where we should take it.

Last week, you said you're going after IBM. As you look at the next generation of applications across the board, who do you think is your primary competitor? Is it IBM and its platform, or is it Google and its web platform?
When it comes to supplying enterprises and having that long-term relationship, we and IBM are hotly competitive in doing that.

In terms of thought leadership, if someone said who's cool right now, obviously, Google would be high on the list there. Really, one thing they've done that's been key to their success [is search]. We have to provide a better search experience - and get people to think about search in terms of these tasks, these contexts. We think we have a lot to contribute there. Not many people are brave enough to compete with something with that kind of scale and momentum. Well, we are.

Google bought a little company that does an online word processor, and there's talk of it doing an online calendar. Do you think it could assemble a web "office" and compete with what you have?
I think they can do anything they want. Remember Orkut? That was a great social-networking thing that I don't think has been heard of for the last few years. They came out with an instant-messaging voice-type product.

Certainly, there will be lots of ways that people offer software over the internet. There will be so many companies doing these things. It's not really appropriate to look at just one.

Not many people are brave enough to compete with [Google], with that kind of scale and momentum. Well, we are.

The idea that there will be complementary capability, where using rich-client capability and web capability - that's a big theme from us. You can look through our history. We've been pretty rational as the fads roll through. Yes, there's a lot to be said for that, but that doesn't take away from the fact that you want - when not connected to the internet - access to your information. You want richness and responsiveness that local applications can provide.

There's a lot of experimentation with business models. Are you concerned that some of the business models are not quite baked?
Well, I think we'll see the same types of things we always see, with lots of new companies and new ideas. Ninety per cent will not be distinct enough or not have the right business model, and those will go away. And yet the 10 per cent that emerge will show new and neat things. Take all the companies doing video today. If you asked me today which ones will be here five years from now, I couldn't really say and yet - I love using them. I think what [they've] got there is neat and exciting.

I do think some of the bigger players, like ourselves, Yahoo! and Google, will be in that space, offering those capabilities as well. But there's room for some great success story to come out of it. I think it's a bit unclear, though, now how far it can go.

What problems do you want Ray Ozzie thinking about, as one of your chief technical officers?
He's a phenomenal person, in terms that he thinks like a developer and thinks like an end user. He'll sit down and literally do story boards - if I want to do this scenario, how can I do very few screens to get to that?

Everything he's done in his career has been a leading-edge thing. He, more than anyone, is thinking: what is a "Live" application? How is it different from a classical application and, therefore, what services should Microsoft provide? He's gathered a top group of Microsoft people, and he's driving that idea of how to design a platform. But because he's Ray, he's keeping in mind those end-user things.

We wanted to hire Ray for decades - literally. But the timeliness of his coming in and knowing he's shaped his mind around what these new applications look like is phenomenal for us. Having someone full-time thinking about that evolution is very, very important.

From a business point of view, what do you think is the bigger opportunity? Is it selling the servers and tools, or is it the advertising?
Well, advertising - nobody really knows what the limits to that are. There will be experimentation to having you watch ads while you're doing anything on the computer, because people will see if they can't make money that way.

I think the thing that will jump out over time - when you're in the context of buying, when you want to organise a trip, an event, pick a gift - will be tools far beyond search that help with that.

There is debate that just doesn't go away, between the web services protocol stack called WS Start and the simpler approach of XML over HTTP. Do you think that you over-engineered web services?
I feel super good that we did the hard work [with web services] and made that an industry standard for rich interoperability. The lead times for that - figuring what standards body to put them in, the testing with IBM products and all those things - that is the one we really needed to put the energy into. Now we can circle back and say, "OK, let's make sure that the tools for all that spectrum are very strong."

When do you think ultramobile devices will become mainstream devices - and even a PC replacement?
Well, it is a PC, and for a lot of people, it will be their second PC. And I'm a total believer in the tablet - I think it will be totally mainstream. Whatever it takes, Microsoft will be behind it to make it better and better. If I'm critical of us, I'd say that making it easy to have multiple PCs [and having] your "state" just show up on those PCs - that's been partly holding people back.

The Origami - you want to take it to meetings with you but you don't want to think about syncing before you walk out to that meeting. [The information] should just be there.

You were critical of the $100 laptop idea for developing countries that's come out of the MIT Media Lab. Can you tell us what alternative approaches you're pursuing?
Anybody that is doing low-cost PCs - that's great. We love low-cost PCs. I do think you do need to think about the cell phone. We're doing some things to let it display on a TV-type screen. Because it's got a network, because it's got a business model, that will often be your first PC [equivalent, in a developing country].

Or [there could be] a shared PC where you go to a community centre and you want a large screen and multiple people can stand around it. The PC industry is very, very competitive, so all the varieties [are] going to get tried. I think countries should let their marketplace figure out where's the training, where are the communications networks, where's the content.

It's a very complex thing that probably doesn't lend itself to a top-down approach but everything that drives computing out to more people we are very, very enthusiastic about.

But you seem to prefer a mobile phone attached to a TV?
No, I don't prefer any - to be clear, I think there's going to be a variety of form factors that relate to the different environments. After all, the communications cost is really the hardest thing here. We have PCs down at $200 - and that's fine. Some of those even have a battery in them. So you don't miss out there - where you miss out is the broadband connection, the curriculum, the support - all the elements that can make it relevant.

Because, after all, we don't just want PCs out there. We want them out there connected and used and relevant so that they lead to more economic success. Certainly, between Microsoft and the [Bill and Melinda Gates] Foundation, I spend a lot of time in developing countries, looking at the realities. It's very complex to make sure you get all those pieces lined up.

March 24, 2006 at 10:42 PM in Microsoft | Permalink | TrackBack (9) | Top of page | Blog Home

60% Of Windows Vista Code To Be Rewritten (plus Johnson PSD memo)

Smarthouse - Platforms

David Richards - Friday, 24 March 2006

Up to 60% of the code in the new consumer version of Microsoft new Vista operating system is set to be rewritten as the Company "scrambles" to fix internal problems a Microsoft insider has confirmed to SHN.

Advertisement

In an effort to meet a dealine of the 2007 CES show in Las Vegas Microsoft has pulled programmers from the highly succesful Xbox team to help resolve many problems associated with entertainment and media centre functionality inside the OS. The team are also working closely with engineers from the Intel Viiv team. and it is now expected that the next version of Viiv could be delayed to line up with the launch of the consumer version of Vista at the 2007 CES Show in Las Vegas.

One of the key components of the consumer version of Vista is the Media Centre code. This will be an optional package in the same way that Microsoft currently sell a Professional and Home version of XP. With Vista there will not be a seperate Media Centre SKU.

One of the key components of the consumer version of Vista is the Media Centre code. This will be an optional package in the same way that Microsoft currently sell a Professional and Home version of XP. With Vista there will not be a seperate Media Centre SKU.

Microsoft has also admitted that it has major problems in it's Windows division and has has immediatly initiated a total restructure of the division, a move that comes after a costly delay in rolling out its Vista program.

The company has said that it is restructuring its Platforms & Services Division and 'enhancing' the leadership team. At the heart of the changes is the elevation of Steven Sinofsky to senior vice president of the Windows and Windows Live Group. 'Steven`s leadership, management and technical skills are well documented and evident in the kinds of products he ships and the type of work environment he creates,' said Ray Ozzie, Microsoft`s chief technology officer.

'I`m looking forward to working with Steven and his team in delivering software-based services that extend the value of our offerings by providing a more seamless connection between our desktop products and the Web.' Analysts estimate that Microsoft`s delays in releasing the next generation of its operating system, known as Vista, have cost it about $500 million.

An internal memo written by Kevin Johnson the Co-President of the Windows division has revealed the changes that the Windows division faces. The text of the memo follows:

"Aligning PSD for Growth and Agility."

From: Kevin Johnson
Sent: Thursday, March 23, 2006 10:01 AM
To: Platforms & Services Division
Cc: Executive Staff
Subject: Aligning PSD for Growth and Agility

Since taking on my new role last September, I've spent quite a bit of time focused on how best to position the Platforms and Services Division (PSD) for the future. I want to share with you some of that thinking and some new changes we are undertaking today.

We continue to see a strong wave of innovation from Microsoft making its way to market. PSD is a big part of this wave. The recent launches from our Server and Tools business, including SQL Server 2005, Visual Studio 2005, BizTalk 2006 and Windows Server R2, have been well received by customers and partners, and the team is now focused on Longhorn Server. The Windows client team continues to drive forward on Windows Vista with the latest CTP that was released in February. The MSN division continues to deliver new innovation such as Live Mail, Live Messenger, our constantly improving search offerings and many other Windows Live offerings. MSN itself has enabled new channels and content and continues to expand. All of these product and service releases are evidence of a strong wave of innovation and momentum in the market.

Over the last few months, I've made it a priority to listen to what's on people's minds. I have had the opportunity to conduct more than one hundred 1:1's and have met with over 2,000 of you at all-hands meetings and roundtables. Not surprisingly some common themes have emerged. Your questions, concerns and feedback, taken together with the dialogue within our leadership team pointed to the need to address three key questions for our division:

What are the next steps for advancing our vision of software + services?

Are there growth opportunities upon which we should be more focused? How can we be more agile?

As our current product pipeline hits the market, it's a good time to lay the foundation for the future of PSD. I have been working with Jim Allchin and other PSD leaders to establish an organization that positions us for the future. This has been a very collaborative process and we have considered many options. The PSD organization changes we are announcing today are driven by the following objectives which are rooted in the input I've received from so many of you:

1. Software + Services: Position for the next wave of innovation relative to our vision for Windows Live. Ray Ozzie and I continue to work closely to advance the Live vision announced last November. End-to-end scenarios that enable seamless experiences across client, server, and services are critical for all customers, and Windows Vista + Windows Live begins to address this vision. Utilizing services as a distribution vehicle for user experiences enables us to embrace the concept of software + service and deliver innovation to market faster. Doing this requires us to think about the Windows Live platform as a key to the value proposition we deliver to developers. These changes provide clear connections with Ray and his team to help shape the Live platform, Live experiences and the marketing that supports Windows Live.

2. Growth: Focus on the key growth opportunities ahead of us, specifically online advertising, emerging markets, and enterprise computing infrastructure. Our Server & Tools business has shown strong growth over the last few years, and has great opportunities to continue that momentum. Windows Client has growth opportunities in premium offerings, new solutions for emerging markets, and in reducing unlicensed PCs. Certainly the upcoming launch of Windows Vista will spark a new wave of growth across our broader industry and partner ecosystem. Analysts predict the online advertising industry will grow to $35B+ by 2008 which creates opportunity for our MSN and Windows Live businesses.

3. Agility: Lay the foundation for accelerating our pace of innovation, including focusing on ways to improve clarity of decision making, drive greater accountability, and reduce layers in the organization so we can move faster. It also means utilizing existing expertise within the division to embrace services -- and rapid release cycles that services can enable -- to all aspects of our business. Our software + service approach and the expertise we have built in MSN can support innovation agility as we enable the Live era.

As part of the next step of Jim's transition, we discussed when it was appropriate to move his direct reports to me, and decided that this organization change was the right time. Jim's overall partnership role with me in running PSD will not be changing.

The PSD leadership team I've put in place to align against these key objectives includes:

Steven Sinofsky, SVP Engineering, Windows and Windows Live Group
Brian Valentine, SVP COSD
Blake Irving, CVP, Windows Live Platform Group
David Cole, SVP, Online Business Group
Yusuf Mehdi, SVP, Chief Advertising Strategist
Mike Sievert, CVP Windows Client Marketing
Will Poole, SVP Market Expansion Group
Bob Muglia, SVP Server and Tools Business Group
Sanjay Parthasarathy, CVP Developer and Platform Evangelism
Brent Callinicos, CFO and CVP Finance Group
Rick Thompson, CVP supporting a special assignment
Darryn Dieken, Technical Assistant
Brian "Skip" Schipper, GM Human Resources
Mary Snapp, CVP and Deputy General Counsel, Legal and Corporate Affairs

I know change is never easy but I truly appreciate the focus that people throughout PSD have on innovation and the wave of products and services our team is delivering to the marketplace is impressive. These changes are intended to help us increase our agility, embrace the concept of software + services, and position us for an exciting future together.

Let's continue to impress customers and partners with our innovation, and drive satisfaction to levels we've never achieved before. Let's also stay focused on our priorities as we make this transition and align our organization for the future.

For those of you who will be on campus in Redmond on Friday, March 24, I hope you can join me in person, in B33/McKinley Room, from 10:00 - 11:00am. The meeting will start promptly at 10:00 a.m., so please plan on arriving a few minutes early to ensure you get a seat.

I hope everyone else will watch the webcast, which will be streamed live on the intranet and archived there for later viewing. Whether you attend in person or via the Net, you can submit your questions to execqa@microsoft.com before the meeting begins. Thank you for your contribution and your continued focus on innovation and our customers.

Kevin

March 23, 2006 at 07:24 PM in Microsoft | Permalink | TrackBack (15) | Top of page | Blog Home

The New Road Ahead: Where next for the knowledge economy?

The New Road Ahead: Where next for the knowledge economy?

Reprinted from Newsweek, Special Edition on Technology

by Bill Gates

December 2005

It's hard to say exactly when it happened, but at some point in the last 20 years the word "knowledge" became an adjective. As intellectual property became increasingly important to businesses, and personal computers started appearing on every desktop, employees morphed into knowledge workers, companies began to focus on knowledge management and key information was stored in knowledge bases connected -- in theory -- via knowledge networks. The result was the knowledge economy, a phenomenon that has transformed the business of business and helped entire emerging economies to compete globally.

But this is only the beginning. Most of the "knowledge" on which the knowledge economy is built is actually just information—data, facts and basic business intelligence. Knowledge itself is more profound. As management guru Tom Davenport once put it, "Knowledge is information combined with experience, context, interpretation, and reflection." It's the knowledge derived from information that gives you a competitive edge.

Most of us now live in an "information democracy"-- if you have access to a PC and the Internet, you can tap into almost all the information that is publicly available worldwide. Advanced software and Web services can help trace, slice and dice the information in ways that were impossible only a decade ago. But while we've gone a long way toward optimizing how we use information, we haven't yet done the same for knowledge.

This is a vast growth opportunity, and a surprisingly tough challenge. While information wants to be free, knowledge is much "stickier" -- harder to communicate, more subjective, less easy to define. For instance, the knowledge you accumulate throughout your career -- the "tacit" knowledge, rather than the "explicit" knowledge found in, say, manuals or textbooks -- defines your value to the organization you work for. Your ability to combine it with the knowledge of co-workers, partners and customers can make the difference between success and failure -- For you and your employer. Yet today, even locating sources of knowledge within complex organizations can be daunting.

But as software gets smarter about how people think and work, it's starting to help them synthesize and manage knowledge, too. Some of this technology is deceptively simple. Software such as our own Microsoft Office OneNote helps people take and organize their typed and sketched notes using a "pen and paper" approach that is more abstract than text-based word processors. On another level, OneNote and a new generation of "mind-mapping" software can also be used as a digital "blank slate" to help connect and synthesize ideas and data -- and ultimately create new knowledge.

Researchers at Microsoft and elsewhere are developing technology that can unobtrusively "watch" you working, then make suggestions about related subjects or ideas. Interestingly, even if the software makes a bad guess, it can still be valuable in helping spark new ideas. Computer scientists are also making progress against a long-held dream of "intelligent agents" that anticipate your needs and provide just-in-time information that's relevant to the work you're doing. Experimental programs known as reasoning engines can test your ideas against commonsense logic, spotting flaws in hypotheses and acting as "virtual subject experts" to help guide your thinking.

These technologies promote "consilience" -- literally, the "jumping together" of knowledge from different disciplines. They help people combine their own ideas with at least some existing knowledge far more efficiently than was previously possible. But they also leave a key problem unsolved: how to unearth all the new ideas that are being generated around the world.

Today's search engines are good at locating tidbits of information in an ocean of data, and even at finding answers to simple questions. The next step is pattern-recognition engines and mental models to help people mine and assess the value of all that information, and technologies that infuse online data with meaning and context. None of this is science fiction: the technologies that make it possible already exist.

The power they hold is hard to exaggerate. Inventor Robert Metcalfe theorized that the value of a network is roughly equal to the square of the number of people using it. "Metcalfe's Law" applies equally to knowledge: being able to tap into the world's finest thinkers as easily as we can now search the Web for information will revolutionize business, science and education. It will literally transform how we think -- and help us finally realize the potential of a truly global knowledge economy.

March 16, 2006 at 10:04 AM in Microsoft | Permalink | TrackBack (7) | Top of page | Blog Home

Remarks by Bill Gates, Chairman and Chief Software Architect, Microsoft Corporation

Bill Gates' Web Site - Speech Transcript, Microsoft Government Leaders Forum Americas

"Enabling Innovation and Prosperity in a Connected World"
Microsoft Government Leaders Forum Americas
Washington, D.C.
March 15, 2006

EUGENIO BEAUFRAND: Welcome back. It's great to have Bill Gates with us today. So, we're just backstage remembering how the Government Leaders Forum got started, I guess, eight years ago now in a modest event in Seattle, and how much he really enjoys coming here every year and sharing with you his vision of the impact of technology in government, and more importantly to hear from you on the challenges and issues that you're facing in your country.

So, please join me in welcoming the Microsoft Chairman and Chief Software Architect Bill Gates. (Applause.)

BILL GATES: Well, good afternoon. I'm excited to be here and get a chance to talk about some of the big changes in technology that create an opportunity to make more efficient government systems, and really redefine the way that citizens think about how they work with government and how efficient communication takes place.

Obviously, we benefit immensely from the exponential improvement that's taking place in the underlying technologies. Chip technology is subject to the exponential improvement referred to as Moore's Law, and that has not only stayed true for the last 20 years, giving us a million times the amount of computing power at a much lower price, but certainly will hold true into the future as well. And so when we think about what we can do with computing, we no longer need to think of performance as that limiting factor.

Likewise, some of the related technologies, the ability to store information, the size of the disk, is actually improving even faster than chip capabilities. So, in the past, it would have been impractical to think about storing all of the videos of your training sessions and your meetings, and making those easily accessible and navigable to all your employees, or even where appropriate to citizens. Today, the cost to do that is extremely low, and is almost commonsense to let people refresh their skills, or stay in touch even if they work at a distance. So, the cost of disk technology is an incredible enabler.

Likewise, the performance of cyber networks has gone up again at exponential rates, and so where it's possible to have that kind of connection, the ability not just to send data, but to send high definition video, even targeting individual viewers now becomes practical, and so what we used to think of as TV is completely revolutionized. The idea of channels goes away, the idea of targeting, the advertising, targeting the material based on your preferences, so that pieces of news that you see depend on your interests becomes just commonsense.

Software Breakthroughs

Software breakthroughs play a big role here as well. Historically, a phone was something you used to make phone calls. Today, the idea that your mail and calendar are there, that it just connects up to exchange, it's secure, it's synchronized, that's kind of commonsense for all the new phone platforms. In the future, you'll be able to speak to your phone and have that recognition, let you navigate the information, or send off short messages. You'll be able to use the camera on the phone not just for pictures, but if you see a sign you want translated into your language, or you have an expense receipt that you want to take a photo of and have the numbers there recognized and filed away on an automatic basis, if you have a person you're meeting, they give you their business card, you can take that photo and off it goes and gets stored in your Contacts. In fact, if you take a picture of them, that's stored there as well. So, it becomes a very intelligent device. The ability to show maps, show things that are nearby, to be the digital wallet, all of that will be common place for that device in the pocket.

And yet, 10 years ago, even the idea that your music collection would move away from physical CDs was not something that people took for granted. Now that's happening, and happening in a very rapid and exciting way. So, software can continue to improve, and that's why Microsoft has dramatically increased its R&D budget, more than doubling it in the last five years. It's over $6 billion a year. A lot of that work is invisible. The work we do for security, that's about 30 percent of it, and making that more something where you don't have to get involved, it's built into the system, that's very critical to us. Making these management tools, so that instead of visiting individual systems, you just set a policy and you can know that it's applied very broadly to those systems. Being able to see the behavior on a system, and see if it's unusually slow, and before that person has to pick up a phone and call, sending an alert, gathering information, so some very automatic diagnosis can be done, even comparing it to whatever database Microsoft has from the experience of all Windows users, and being able to make that far less of a manual process to figure out what's wrong and actually use the network connection to send the updates so that you're never having to actually go visit the machine itself. Things like that can reduce complexity and free up IT investment to go into the new areas, the wireless networks, the portable machines, collaborative Web sites that define the future opportunities.

When I was thinking about the different government systems, I thought, what are some of the key trends that really pull these things together, and how can I describe the neat new things I'm seeing in a way where it can help you imagine the places where you're not yet using a digital approach that you might be able to put that in place? So, I picked what I think of as the three big trends with some examples of that. Hopefully it will stimulate ideas about where, given the basic infrastructure, the Internet, the PC, how you can get far more out of that really by just a trivial investment, have the working style be far more effective.

First Trend: Collaboration

The first trend is collaboration. Historically, people collaborated by meeting face to face, or e-mail has become a key part of that. Now, both of those are great techniques, will continue to be very important. Voice mail was important, but it was isolated from electronic mail. So, one of the most basic things we're doing is using the Exchange system now to bring your voice mail and your e-mail in together, letting you dial in to the system, and not only hear voice mail, but have text-to-speech that lets you go through your e-mail, or navigate your calendar as well. And so, no more dividing line between those different worlds.

But even more important is letting people connect and share both in real-time, or when they're not working at the same time, connecting asynchronously. In real-time, we call that Live Meeting, where in addition to connecting up your phone, you can connect your screen up, and so talking through problem, going through a discussion session, editing a document, you can do that even if you're in a different location. And it's simply using the Internet to make that connection, and to have that sharing capability. And that's, of course, some work, one to one, one to a hundred, one to 10 thousand, and it's really reshaped for Microsoft how we keep up to date. And we've reduced our internal travel, travel by employees, by over 30 percent since we've been able to put that into place.

In terms of sharing things in a collaborative way, what you really want to do is be able to create Web sites without any programming, and that's what we've been working towards with SharePoint, particularly the new version coming out next year, the idea that you can simply say, okay, I want to have a discussion group about this topic. I want to have blogging, or editing things that on the public Internet is called the Wikipedia, and I want it to be secure, administrable by my key people, backed up the right way, we've taken those concepts and just built them in as a template to that SharePoint infrastructure that is standard in Windows Server. So, collaboration, I think the way to frame this mentally, is to say, what groups of my employees do I wish could share best practices, hand off work to each other, look at the status of things, have group discussions, which of them could benefit from that, and just connecting them up to a SharePoint server where IT doesn't need to get involved when they create these new sites, that's the foundation that lets you do that.

A good example in the United States is the Illinois Department of Central Management Services, they put all their procurement people there, and so now the procedures, the handoff, the major procurements, there are Web sites for those things. If somebody goes on vacation, you get a handoff, you can see if something is coming up on a deadline. A very simple system, had a very dramatic benefit in making those people more effective and, of course, that means saving the State millions of dollars, and also having a learning culture where people are seeing how things are done, and working in a new way.

Another example down in Chile is called "ChileCompra." Again, this relates to procurement, and here it's an electronic platform that includes the structured part of listing things, making that public, making it obvious to people that there was openness in terms of how the bidding takes place there. And it fits into that overall agenda that Chile is having around their digital agenda, where authenticating people who connect up is very straightforward. I hear the benefits are pretty dramatic. The estimates are that they're saving $60 million by more competitive bids, and actually allowing small businesses that wouldn't have been able to participate, because they don't have the sales force, now, because it's a discoverable electronic process, to come in and see where they can be involved.

A final example is one that is pretty dramatic, where, in Louisiana after Katrina, the ability to exchange information really needed to cut across departmental boundaries. A big problem with IT systems is that often these collaborative sites can bridge if you can just set them up and let people connect up, let them have search commands to find these things, you can get people sharing information about emergent issues. Obviously with Katrina that needed to involve the Red Cross, it needed to involve a number of state agencies, federal agencies, and have people come up and register where they work, they can find family members, other people would be able to go in and look at that. And even connecting it up to the satellite imagery system that we have, so you can look at different locations, see the status of things, the schedule for when things are going to change. Over 300,000 citizens connected up and communicated through that system, and yet it needed to be set up within a few days, and it needed to deal with the fact that many of these sites had had their Internet connectivity brought down in a way that meant that their connections were interrupted and that they needed to be able to work with an offline access. So they actually used the Groove capability that lets you work that way.

Second Trend: Mobility

A second trend that's complementary, but kind of amazing as well, people are now thinking about getting access to information wherever they go, so this is mobility. Of course, we've had portable computers for a long time. They're getting smaller, faster. That improvement by the hardware vendors to make them thinner, less expensive and lighter, actually we had a big milestone just last week when a number of our partners brought out what we call Ultra-Mobile PC. This is an example of one, this one actually happens to come from Samsung. You can see it's a very high resolution display. This is a device whose price ranges from $600 to $1,000 in its basic configuration.

The information is just automatically brought on here by the mail system and the file replication system, so you don't have to work to bring it on. We've made it so that actually not only can you use the pen, so it's got a pen built in, so you can work with ink and things, but also for a lot of things, if you're just browsing information, we've made it so that just touch works very well. We actually had to invent an idea of how you use your thumb to make these things very simple. So that's been a nice advance. Also for a lot of users who are used to a thumb-type keyboard entry, we actually took this idea. So if you press this, you can see we bring up – you may not be able to see it. We bring up a little soft keyboard, so a lot of users can do entry that way as well.

So ink, speech, touch, all of these things, giving people a way of interacting. So you'll have a full spectrum of devices, from the phone in your pocket, to the larger screen phone, to the low-end Tablet device, all the way up to a large Tablet, then of course on your desktop moving up to a screen that used to be 15 inches, now would be 20 inches, or even 24 inches, so you can work with more information, but all of those a common architecture so that the applications, what you learn, the way you work is all identical and connected through these amazing wireless networks.

A good example where mobility is in place is the U.S. Army Advanced Technology Center for their medical application, called Battlefield Medical Information Systems, actually took a combination of Pocket PCs, which are the smallest devices, connected up to those for diagnosis and information capture, as well as being able to connect up these kinds of devices. So they wrote one application, but it could target interaction with the patient record and what was going on, and immediately get the input to that person. Both of those let you use ink input so your notes can be captured very quickly, and yet go back up there and be part of that permanent record.

Third Trend: Digitization

The final trend is digitization, where the move [is] away from paper forms, the move away from paper records, and files, and warehouses, to doing those things on a digital basis, but not just on an image-capture basis, on a structured basis, so that mining the data, finding the slice of data that's important, that all becomes commonsense. We see this from consumer, where the photos you take of your kids as they grow up, looking at those by location, by time, eventually even with the software recognizing who is in the photo, so it can help select those out, or making it easy for you to take things, so that you can navigate by those different sets, and being able to share those photos very easily, that is just expected, and a big change away from the shoe box, and yet with the right type of backup approach even more secure than it would have been on a physical basis.

Government records, same thing, the need to have explicit policies about what you keep, about what you don't keep, the digital realm lets you be more explicit about those things, to understand who should access which piece, and not only have that, but also have an audit trail, so somebody is doing unusual access that will jump out in terms of a profile of usage there that you'll be able to navigate with very visual tools. A great example of this is actually my own state, the state of Washington, where they were building up a lot of physical records and made the jump now to do that on a digital basis with a rich content management system, and that lets them have the access, save money, and I think is a very forward looking example.

A final example is one that I think really brings all these trends together, digitization, in this case it's educational, so the curriculum, mobility, empowering the students with a Tablet-type device, and then collaboration, creating a community around students, parents, teachers, and so that when there's a schedule change, or a problem taking place, or a parent wants to know what the assignment is, or the attendance record, all of that information access is there in a very simple way.

The place this got pulled together in a very leadership example is what's called Philadelphia School of the Future. They build Web sites that are designed for the parents to come in and teachers being able to take the subset of information that should be visible to the parents, authenticating the parents, having that back and forth work in a very easy way. Even bringing in the normal processes, the human-resources applications that the teachers have to interact with, the student records applications, all of those are set up there. Then they build portals, whenever there's an issue that the school wants input on, the idea that you can have that discussion group, or blog type approach, they just – that's a component set in the right place in the Web site. They put that in, and then without doing any development, that's very straightforward.

They've been using the Tablet PC, they will be trying out the Ultra-Mobile PC that gets you to a lower price point even than before. They've actually issued the students smart cards, so the idea of how they authenticate and control the information, they're a pioneer there, because the whole world over time will move away from passwords to using this type of smart card.

I think the most advanced idea is how this affects the curriculum. There's a lot that has to be done to think through a digital curriculum, and how it lets the teacher customize, lets them bring in video, lets the students kind of explore and find things that they are interested in, and bring back to the classroom. And one of the software tools they've built is what they call the Virtual Teaching Assistant, and they're willing to share that with people. So as we get projects like this, the ability to not only share best practices, but literally take some of the code, some of the content, and make sure they get reused, built upon, and even go back to help each other, I think is one of the really exciting things as we're taking digital technology and finding the new applications.

Conclusion

In the world of government, there's great work going on, I'd say, in many, many areas around the world, judicial systems without any paper in some locations, educational systems that are really moving into the non-textbook world. Medical systems, there I don't think anybody has achieved the ideal yet, but that's a critical issue that the opportunity there to understand that becomes better, to make less mistakes, to reduce the costs, and waiting, and raise the resource utilization, certainly a great investment that's taking place in that.

So I'm excited that we got the group together to share ideas over these last few days. It's part of a process where we want to be a real enabler, and getting you to think even more aggressively about how technology can help. We're certainly committed not just in our research budget, but in our dialogue with you to understand how we can set our product priorities in a way that can have a huge impact. I think there's a big opportunity for us working together.

Thank you.

March 16, 2006 at 09:53 AM in Microsoft | Permalink | TrackBack (1) | Top of page | Blog Home

The Ballmer tirade: Ballmer vowed to "kill" Google CEO, court hears

Ballmer vowed to "kill" Google CEO, court hears - WebWatch - Breaking Business and Technology News at silicon.com

"I'm going to f***ing bury that guy"
Add Comment Printer Friendly Email Story

By Ina Fried

Published: Monday 5 September 2005

Microsoft CEO Steve Ballmer vowed to "kill" Google in an expletive-laced, chair-throwing tirade when a senior engineer told him he was leaving the company to go to work for Google, the engineer claimed in court documents made public on Friday.

The allegation, filed in Washington state court, is the latest salvo in an increasingly nasty court fight triggered when Microsoft executive Kai-Fu Lee jumped to Google in July in what Microsoft claims is a violation of a one-year, non-compete agreement.

In a sworn statement made public on Friday, Mark Lucovsky, another Microsoft senior engineer who left for Google in November 2004, recounted Ballmer's angry reaction when Lucovsky told Ballmer he was going to work for the search engine company.

Lucovsky said in his statement: "At some point in the conversation, Mr Ballmer said: 'Just tell me it's not Google'." Lucovsky replied that he was joining Google.

"At that point, Mr Ballmer picked up a chair and threw it across the room hitting a table in his office," Lucovsky recounted, adding that Ballmer then launched into a tirade about Google CEO Eric Schmidt. "I'm going to f***ing bury that guy, I have done it before, and I will do it again. I'm going to f***ing kill Google." Schmidt previously worked for Sun Microsystems and was the CEO of Novell.

Late on Friday, Ballmer issued a statement disputing Lucovsky's declaration. "Mark Lucovsky's account of our conversation last November is a gross exaggeration of what actually took place," Ballmer said. "Mark's decision to leave was disappointing and I urged him strongly to change his mind. But his characterisation of that meeting is not accurate."

The Lucovsky declaration is the latest salvo in the heated battle between Google and Microsoft over Google's hiring of Lee. Google has said Microsoft is attempting to scare its employees away from Google.

In the filing made public on Friday, Google also said that if Lee is allowed to join the company before a trial he will not "work or consult in any of the technical areas identified in Microsoft's proposed preliminary injunction. Rather, pending trial, he will open a product development centre in China, and staff it with non-Microsoft personnel".

Meanwhile, in separate court documents also made public on Friday, Microsoft said emails Kai-Fu Lee sent to Google executives bolster its case that the researcher is seeking to violate his employment contract by taking up a position as head of the search giant's China efforts.

According to the filing, Lee sent a 7 May email to Google's founder and chief executive saying he had heard Google was opening a China office and expressing interest in discussing the matter. In the email, Lee described himself as "corporate VP at Microsoft working on areas very related to Google", Microsoft reveals in the court documents.

Microsoft also notes that, in the same email, Lee linked to his corporate biography, which Google has cited as evidence Lee's work was not directly related to the work he would do at Google.

In addition, for the first time, the filing notes the size of Lee's pay package from Google. Microsoft said the search company agreed to compensation "worth in excess of $10m, including a $2.5m cash 'signing bonus' and another $1.5m cash payment after one year, a package referred to internally at Google as 'unprecedented'".

The document is part of Microsoft's argument as to why a judge should issue a preliminary injunction preventing Lee from taking a position at Google that would compete with his work at Microsoft until a trial can be held in the case. A hearing on the injunction request is planned for Tuesday in King County Superior Court in Seattle. The judge hearing the case has already granted Microsoft's request for a temporary restraining order preventing Lee from doing such work for Google until Tuesday's hearing.

A representative for Microsoft did not comment beyond the filing. A Google representative was not immediately available for comment.

Ina Fried writes for CNET News.com

January 25, 2006 at 09:16 PM in Microsoft | Permalink | TrackBack (1) | Top of page | Blog Home

Microsoft looks beyond Vista, sees Vienna

Microsoft looks beyond Vista, sees Vienna | CNET News.com

Although Microsoft is hard at work trying to ship Windows Vista this year, the company is beginning to set its sights on the next horizon, Vienna.

Vienna, once labeled Blackcomb, is the new code name for the successor to Vista. It is not clear when Vienna might ship or what features it might contain. Microsoft confirmed the name change on Friday, but declined to comment on Vienna's stage of development.

"The 'Blackcomb' code name has been changed to 'Vienna,' but we do not have any other details to share on timing or focus," Microsoft said in a statement to CNET News.com. "This does not reflect a big change for us; we have used city code names in the past, which are derived from cities/locations in the world known for great 'vistas'--the kinds of places we all want to see, experience and that capture the imagination. Vienna fits with this concept."

The code name for Windows XP was Whistler, a Canadian ski resort. Blackcomb was also a ski resort, while Longhorn (Vista's code name) came from the Longhorn Saloon, which was about halfway between Whistler and Blackcomb.

Microsoft evangelist Robert Scoble first confirmed the new code name in a posting to the company's Channel 9 developer site.

Directions on Microsoft analyst Michael Cherry said that Microsoft is looking to speed up the frequency of its Windows releases, but cautioned not to read too much into the name change.

"It's just a morale thing," Cherry said. "The other names have been kicking around so long. It's much more about trying to keep focused and keep some excitement around where they are going."

As for Vista, Microsoft is slated to ship it in the second half of this year, roughly five years after it shipped Windows XP. The Vista update promises to have better search, a new graphics engine and other improved features.

However, there are several features that were pulled out of Vista that could conceivably become part of Vienna, most notably a new file storing mechanism known as WinFS.

January 21, 2006 at 04:26 PM in Microsoft | Permalink | TrackBack (0) | Top of page | Blog Home

Bill Gates Keynote at the Consumer Electronics Show (CES) 2006

Bill Gates Webcasts

January 4, 2006

For the tenth year in a row, Microsoft Chairman and Chief Software Architect Bill Gates returned to kick off CES with his vision of the year ahead in consumer electronics. Bill delivered the opening keynote on Wednesday, January 4 at 6:30 P.M. Pacific in the Las Vegas Hilton Theater.

In his keynote, Gates shared Microsoft’s vision for the future of consumer technology, highlighting the important role of software in developing and delivering innovation that benefits the industry, our partners, and people everywhere. If the past is any indication, expect the unexpected. Bill has used his keynote address at CES in the past to unveil new products ranging from Xbox and Tablet PC to Smartphones. And with Microsoft’s strong lineup of innovative new products scheduled to launch in 2006, including Windows Vista, this year’s keynote provides a glimpse at the important new technologies that will be shaping the industry.

January 6, 2006 at 12:45 AM in Microsoft | Permalink | TrackBack (8) | Top of page | Blog Home

Gates Outlines Vision for the Digital Lifestyle and Showcases New Products and Technologies From Microsoft

Gates Outlines Vision for the Digital Lifestyle and Showcases New Products and Technologies From Microsoft: CES keynote address features first broad demonstration of Windows Vista; new Xbox 360 peripherals, mobile devices and Windows Live services.

CES keynote address features first broad demonstration of Windows Vista; new Xbox 360 peripherals, mobile devices and Windows Live services.

LAS VEGAS — Jan. 4, 2006 — Highlighting key consumer products such as Xbox 360™ and offering the first broad demonstration of the consumer features of Windows Vista™, Microsoft Corp. Chairman and Chief Software Architect Bill Gates showed how the company is delivering on its vision for a digital lifestyle where devices, services and applications work together seamlessly. In his 10th annual keynote address at the 2006 International Consumer Electronics Show (CES) in Las Vegas, Gates demonstrated how Microsoft® Windows Vista, Xbox 360, new mobile devices and the emerging wave of software-based services will deliver more connected and richly personalized experiences for consumers.

In his keynote, Gates said that the consumer electronics industry is poised to deliver a quantum leap forward in rich, interactive, high-definition experiences. “Technology has revolutionized how we listen to music, watch TV, play games, communicate, and manage and share personal information,” he said. “In the years ahead, further exciting innovations will unify the software, hardware and services in people’s lives, offering them even richer, more engaging and deeply connected experiences.”

Windows Vista Unveiled

In the first broad demonstration of Windows Vista for consumers, Gates showed how Microsoft’s next-generation operating system, due later this year, will offer customers powerful new advances in security, search capability and digital entertainment. He highlighted how Windows Vista will bring clarity to customers’ digital world and help them easily accomplish everyday tasks, instantly find what they want, enjoy the latest in entertainment, keep their personal information safe, and stay connected at home or on the go.

He highlighted some of the most compelling consumer-oriented features of Windows Vista, including a sleek user interface, richer multitasking experiences and deep integration of search throughout the operating system. He also showed the new Windows® Photo Gallery, which will make managing and working with digital photos easier.

He showcased the most advanced Windows games platform for everyone from casual players to hard-core gamers, including stunning graphics capabilities, by premiering Microsoft Games Studios’ forthcoming “Flight Simulator X,” the most realistic flight simulator in the franchise’s 25-year history.

Gates was joined onstage by MTV Networks’ Music Group President Van Toffler to showcase the forthcoming URGE digital music service, which is designed to bring people’s emotional connections with music to the forefront of the digital entertainment experience. URGE will give users of Windows Media® Player 11 instant access to more than 2 million songs from major and independent labels as well as exclusive MTV Networks programming and content.

Demonstrating the Windows Media Center capabilities of Windows Vista, Gates cited growing momentum around the platform by announcing that more than 6.5 million Windows XP Media Center Edition-based PCs have been sold from more than 130 computer manufacturers worldwide.

In another sign of momentum for Windows XP Media Center 2005, Microsoft announced that Comedy Central has joined a group of 110 Online Spotlight content partners and that forthcoming Media Center PCs will include CableCARD support for high-definition programming without a set-top box. This will allow users to plug their digital cable signal directly into their PC to watch and record premium cable content, including high-definition programming, without a set-top box.

Xbox 360 Leads the Way in High-Definition Entertainment
ust a month after the global launch of the new Xbox 360 video game and entertainment system, Gates discussed the product’s strong momentum in delivering high-definition hardware, games and digital entertainment experiences. Xbox 360 is on track to be the fastest-selling video game console ever, forecast to ship between 4.5 million and 5.5 million units worldwide by the end of June 2006.

Gates noted that Xbox 360 has also become a powerful application for high-definition television, adding that nine out of 10 Xbox 360 owners currently own or intend to purchase a high-definition television set.* He announced that more than 50 new high-definition Xbox 360™ games will be available by June 2006.

Building on Xbox 360 leadership in high-definition experiences, the company announced plans to deliver a new Xbox 360 external HD DVD drive in 2006. The new drive will offer millions of Xbox 360 owners the ability to easily enjoy HD DVD movies and will provide consumers with even more choices for experiencing high-definition content, in either physical or digital form.

Using Xbox 360 and the Xbox Live® service today, consumers are already able to access high-definition entertainment such as Xbox Live Arcade titles, game demos and high-definition movie trailers. Consumers can also use their Xbox 360 system to access high-definition television and movies from their Windows XP-based Media Center PC.

Gates’ keynote also showcased the momentum behind Xbox Live, announcing that more than half of all Xbox 360 owners are already connected to the online games and entertainment service, which boasts a worldwide community of more than 2 million members. He demonstrated Electronic Arts Inc.’s forthcoming EA SPORTS™ “Fight Night Round 3,” scheduled to be available in February 2006, and announced that a free, playable high-definition demo of the game is now available at the Xbox Live Marketplace, a one-stop digital download center where consumers can access high-definition games, music and movie content from leading industry partners.

Staying Connected With Powerful Windows Mobile-Based Devices

Gates highlighted the Treo 700w, an innovative new device that brings Palm Inc.’s celebrated ease of use to the Windows Mobile® platform. The Treo 700w, available exclusively on the Verizon Wireless network, combines a great mobile phone with easy access to wireless
e-mail and business applications, giving professionals more ways to stay connected while on the go. The Treo 700w is available at retail Jan. 5.

The keynote also included a demonstration of how future technologies will transform the way people manage information in the office or on the go, communicate with
co-workers in richer and more immersive ways, and be more productive wherever they are.

Continuing his keynote, Gates showcased Microsoft’s advancements in mobile entertainment by unveiling next-generation Windows Mobile-based Portable Media Centers from Toshiba Corp., Tatung Co. and LG Electronics. The new devices, scheduled to be available this year, will feature extensive battery life, support for new high-resolution and widescreen (16:9) displays, direct audio/video recording, gaming, FM tuners and direct connections to digital cameras.

New Content to Energize the Digital Lifestyle

Gates’ keynote address highlighted a number of new alliances that use Microsoft software to provide broader and richer content to consumers. He showed Starz Entertainment Group’s new Vongo video download service, which offers more choices and great experiences for people using Windows Mobile-based devices. Vongo subscribers will enjoy unlimited access to more than 1,000 first-run movies and video selections as well as the streaming Starz TV channel.

Microsoft announced a broad agreement with DIRECTV Inc. that will open up new ways for consumers to enjoy their digital media in the networked home and on portable devices. Microsoft and DIRECTV will work together to enable digital content to flow between Windows-based PCs, DIRECTV devices, PlaysForSure™-based portable media devices and Xbox 360.

It was also announced that Microsoft and British Sky Broadcasting (Sky), the leading pay-TV provider in the U.K. and Ireland, plans to create a Windows Media Center version of Sky’s forthcoming broadband content service, Sky by broadband. The service will enable millions of Sky TV customers to access video content from their PC, including hundreds of movies and sports clips.

Windows Live Services Deliver Rich, Seamless Experiences

In the area of software services, Gates previewed new Windows Live™ offerings, designed to bring together relationships, information and interests that are important to people on PCs and a wide range of devices. He unveiled two new telephones from Royal Philips Electronics and Uniden America Corp., designed to work with the voice communications capabilities in the upcoming Windows Live Messenger, the soon-to-be-released successor to MSN® Messenger, which has more than 200 million active accounts around the world. The new phones will allow consumers to make calls from a cordless handset connected to both the Windows Live Messenger service and public telephone networks. The Philips VOIP433 Dual Phone will debut in Europe, Asia Pacific and Latin America in 2006. The Uniden WIN 1200 Digital Cordless Phone will offer people another option for making calls over the Internet and will be available in North America in spring 2006.

Gates also previewed forthcoming services for Windows Live and Windows Vista that will help people find and manage their entertainment on the Windows-based Media Center PC or Microsoft TV IPTV Edition-powered set-top box from almost anywhere in the world. TV gadgets on Live.com will enable people to find, manage and share personalized TV recommendations as well as remotely schedule recordings on their Media Center PCs.

Gates concluded his keynote address by looking back on the great momentum of 2005 in consumer technologies and outlining key trends that will shape future innovation in the consumer electronics industry.

“The incredible momentum around all these new products and services shows that the digital lifestyle has truly gone mainstream this year,” Gates said. “Now it’s time to bring together the devices, software and services in people’s lives and take all these experiences to the next level.”

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Some information contained in this document relates to prerelease product which may be substantially modified before first commercial release. Accordingly, the information may not accurately describe or reflect the product when first commercially released. This document is provided for informational purposes only, and Microsoft makes no warranties, express or implied, with respect to this document or the information contained in it.

* According to a recent survey by Penn, Shoen and Berland Associates

Microsoft, Xbox 360, Windows Vista, Windows, Windows Media, Xbox Live, Windows Mobile, PlaysForSure, Windows Live and MSN are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.

January 5, 2006 at 12:33 PM in Microsoft | Permalink | TrackBack (2) | Top of page | Blog Home

Gates promises Windows everywhere

BBC NEWS | Technology | Gates promises Windows everywhere

By Alfred Hermida
Technology editor, BBC News website in Las Vegas
Microsoft boss Bill Gates has made an ambitious pitch to put Windows software at the heart of everything people do.

Speaking as the Consumer Electronics Show (CES) in Las Vegas opens, Mr Gates talked about Microsoft's plan to remake itself to match digital lifestyles.

"Consumers are getting more connected and software is at the centre of that," he told an avid tech audience.

Some 130,000 people are expected to attend CES to catch up with the latest gadgets and technology trends.

Future vision

Mr Gates is a veteran keynote speaker at the annual techfest, which is one of the largest consumer electronics show in the world.

The main theme emerging at the conference is of an online, connected world where consumers can easily control their media, deciding how and when they listen to music, read the news or watch TV.

While this idea has been talked about in the past, many believe technology has matured to a stage where it is becoming reality.

Bill Gates and Steve Ballmer on stage at CES, AP
Bill Gates took on Steve Ballmer in the virtual boxing ring
Microsoft's co-founder and chief software architect sought to wow his captive audience with a scenario of the potential of such a digital future.

This ranged from a flat touchscreen panel in the kitchen showing customised TV reports, traffic updates and the location of family members to a wraparound desktop at work that combined video conferencing, instant messaging and more.

"These are scenarios that people understand if we make them simpler," he said. "These things need to work across all the different devices."

In Mr Gates' future, Windows will be the backbone that binds different devices and systems.

It marks a shift of focus for Microsoft, which has in the past focused on PCs.

Music store

But the home computer was not ignored. During the presentation, there were more details about the upgrade to the Windows operating system, called Vista, due to go sale in the latter half of the year.

Bill Gates at CES, Getty Images
Mr Gates said Windows would be behind many different gadgets
But the focus was largely on entertainment features such as watching video or listening to music.

There were also details of the deal with MTV to provide an online music store, called Urge, which will feature two million tracks.

The service will be integrated into the new Windows Media player, much like Apple's online store is part of iTunes.

"2006 is going to be a big year for the digital lifestyle," concluded Mr Gates.

Attendees at CES will have the opportunity to hear different visions of the future in speeches at the conference by the heads of Sony, Intel, Yahoo and Google.

The show starts officially on Thursday and runs until Sunday

January 5, 2006 at 12:31 PM in Microsoft | Permalink | TrackBack (5) | Top of page | Blog Home

Can This Man Reprogram Microsoft?

Can This Man Reprogram Microsoft? - New York Times

By STEVE LOHR
Published: December 11, 2005

Redmond, Wash.

THINK back to Round 1 of the Internet, when things really got rolling in 1995. The computing landscape was shifting, and a cool, fast-growing young company symbolized the new order: Netscape. At the time, Microsoft looked to be a lumbering old war horse, trapped in the yesteryear of desktop personal computer software, word processors, spreadsheets and operating systems. It seemed, in other words, so 1980's.

But, of course, Microsoft emerged a winner. It embraced the Internet and vanquished the Netscape threat with hard work, ingenuity and strong-arm tactics that a federal court ruled violated the nation's antitrust laws. Microsoft's shares soared to a record high at the end of 1999.

The Internet, Round 2, is now under way. Again, the computing terrain is changing remarkably, helped along by free software like Linux and the spread of high-speed Internet access. Today, all kinds of computing experiences can be delivered as services over the Internet, often free and supported by advertising. Clever Internet software can now turn flat, view-and-read Web pages into snappy services that look and respond to a user's keystrokes much like the big software applications that reside on a PC hard drive. New companies are even sprouting up to offer Web-based word processors and spreadsheets, products long regarded as mature - and long dominated by Microsoft's desktop programs.

Champions of the Internet services model range from I.B.M. to start-ups. But the totemic company in this next big evolutionary step in computing is Google, the Internet search power whose ambitions appear to be growing as fast as its profits.

And Microsoft? It once more finds itself surrounded by doubt and dismissed as a laggard. Some of its own senior engineers have defected to Google and elsewhere, and its stock price has barely budged in three years, despite solid earnings growth, because others appear to be winning the race for the future.

The familiar pattern of a decade ago begs the question that Bill Gates was asked when he met last month with a group of executives and journalists from The New York Times: Will you do to Google what you did to Netscape?

Mr. Gates, the Microsoft co-founder and chairman, paused, looked down at his folded hands and smiled broadly, as if enjoying a private joke. "Nah," he replied, "we'll do something different."

The man whom Mr. Gates is counting on to make a difference is Ray Ozzie, a soft-spoken 50-year-old who joined the company just eight months ago. He has the daunting task of galvanizing the troops to address the Internet services challenge, shaking things up and quickening the corporate pulse.

The forces arrayed against Microsoft, analysts say, may well prove more formidable than ever. "The problem Microsoft faces today is that there is a totally different model emerging for how software is created, distributed, used and paid for," said George F. Colony, the chairman of Forrester Research, a technology consultant. "That's why it's going to be so difficult for Microsoft this time."

Yet there are optimists. Big industry shifts, they say, create opportunity. Inevitably, they note, Internet computing erodes Microsoft's power to set technology standards, but the company can still benefit as the overall market expands. That's what happened in the 1990's. They say that if Microsoft shrewdly devises, for example, online versions of its Office products, supported by advertising or subscription fees, it may be a big winner in Internet Round 2.

"There's a tremendous opportunity for Microsoft to expand its business," said Richard Sherlund, an analyst at Goldman Sachs, who has a buy recommendation on the company. "But Microsoft had better be sure it is the one that capitalizes before others cannibalize their business."

AT first blush, Mr. Ozzie, whose title is chief technical officer, seems an unlikely person to meet the threat of Google and its brethren. He has only a small staff and no direct control over Microsoft's vast product groups. "It's soft power," Mr. Ozzie said in an interview here last week, referring to the foreign-policy concept that influence need not be measured in bombs and battleships.

And few doubt Mr. Ozzie's influence. "Ray Ozzie is someone with a tremendous technical reputation and an outsider, who Bill Gates trusts, and he's come in and said things have to change," said Michael A. Cusumano, a professor at the Sloan School of Management at the Massachusetts Institute of Technology.

Mr. Ozzie is a software wizard whose geek gene was evident early. Growing up in suburban Chicago, he had a passion for Heathkits, which were do-it-yourself projects for electronics hobbyists. He was constantly building radios, tape players and other electronics gear, recalled Jack Ozzie, his younger brother. "There was always a smell of solder in the back bedroom," said Jack, who is a software engineer.

At the University of Illinois at Urbana-Champaign in the early 1970's, Mr. Ozzie wandered into the building that housed Plato, a computer system with terminals linked to a mainframe in a network that, remarkably for its time, had instant messaging, e-mail and online discussions. Mr. Ozzie became a senior programmer on the Plato system.

Mr. Ozzie recalled that he was "forever changed" by his experience with Plato. It gave him, he said, "a peek at what the Internet would ultimately become. It was a microcosm, an online community in an era when there weren't online communities."

In the 1980's, Mr. Ozzie applied that perspective to the new technology of the day: personal computers. At the time, PC's were mainly stand-alone machines for word processing, spreadsheet calculations and desktop publishing. Mr. Ozzie recognized that PC's could also be powerful tools for communications and collaboration. He led the team that created Lotus Notes, an early program for corporate e-mail and sharing information in digital workspaces, anticipating the kind of computing that would become commonplace only later with the rise of the Internet and the Web. In 1995, I.B.M. paid $3.5 billion for Lotus Development Corporation and the prize was Lotus Notes.

In 1997, Mr. Ozzie founded Groove Networks to make advanced collaboration software using Internet peer-to-peer technology, well before the arrival of Napster and peer-to-peer networks for sharing music. Groove was a technological triumph, but not a big commercial success. Microsoft bought Groove this year to pick up its technology - and Mr. Ozzie.

Years ago, when Mr. Ozzie was a Microsoft competitor, Mr. Gates called him one of the world's great programmers. So, in Microsoft's engineering culture, Mr. Ozzie brings a lot of clout to his job.

He hit the ground quickly after he arrived in April. At first, he said, some executives told him that it was a big company and that he should get to know it for a year or so before deciding what to focus on. "That lasted about two weeks," he said.

In meetings of senior executives, the subject of how to cope with the Internet services shift in computing, how to turn it into an opportunity for Microsoft, was a constant theme - and one that deeply interested Mr. Ozzie. "Within a month, Ray was putting his thoughts on software-as-services on paper," noted Jeff Raikes, president of Microsoft's business division, which includes the Office products and corporate software.

Mr. Ozzie then spent the next few months meeting with people across the company to see what work was being done in product groups. Simultaneously, he was devising a plan to help Microsoft capitalize on Internet services by blending the new technology - and economic models - with Microsoft's traditional software business.

In late October, Mr. Ozzie presented his ideas in a seven-page, 5,000-word memo, "The Internet Services Disruption." At first, it was e-mailed to fewer than 100 senior managers and engineers at Microsoft. But they passed it along to colleagues, and by early November it had leaked out to the press; copies are now posted on the Web. Microsoft has used such memos over the years to educate its corporate troops and to stir them up to combat major competitive challenges.

In a two-page note that accompanied the Ozzie memo, Mr. Gates compared it to one he wrote in 1995, "The Internet Tidal Wave," which assessed the Internet challenge of a decade ago. Microsoft, he wrote in the introduction to the Ozzie memo, was at similar crossroads. "This coming 'services wave' will be very disruptive," Mr. Gates wrote, and later emphasized, "The next sea change is upon us."

The Ozzie memo analyzes the Internet services trend, the competition and Microsoft's strengths and shortcomings, and it suggests how the company must change. The document is also a call to action: "It's clear that if we fail to do so, our business as we know it is at risk," Mr. Ozzie wrote. "We must respond quickly and decisively."

The memo is peppered with technical acronyms, and rivals are named. While Microsoft is progressing on several fronts, Mr. Ozzie wrote, "a set of very strong and determined competitors is laser-focused on Internet services and service-enabled software."

"Google is obviously the most visible here," he added.

There is an implicit critique of Microsoft's software-building practice of relying so much on product cycles measured in years. The last major release of Windows - XP - was in 2001, while the next one, Vista, has been scheduled for next year after repeated delays. The memo chastises no product by name, but it extols the virtues of speed and simplicity in software design.

"Complexity kills," Mr. Ozzie wrote. "It sucks the life out of developers, it makes products difficult to plan, build and test, it introduces security challenges, and it causes end-user and administrator frustration."

HIS comments all but echo those of some estranged engineers who have left Microsoft recently. Mark Lucovsky, a former senior engineer at Microsoft who joined Google, wrote in his blog earlier this year, "Microsoft used to know how to ship software, but the world has changed." The companies to watch, Mr. Lucovsky wrote, have "embraced the network, deeply understand the concept of 'software as a service' and know how to deliver incredible value to their customers efficiently and quickly."

Mr. Ozzie is understandably careful in what he writes and says; his role at Microsoft is mainly to lead and encourage rather than to criticize. He emphasizes the importance of Microsoft's big desktop products like Windows and Office, and he says that Internet services should be seen primarily as a way to continually update and improve its offerings. Those updates and improvements, he said, should make Microsoft software teams happier by moving their work into the marketplace faster.

"People like to have fun doing what they're doing, and people who build software have fun by having people use their stuff," Mr. Ozzie said in the interview.

Yet Microsoft will also selectively offer Web services that do over the Internet some of what Office and Windows do on the desktop. The company took measured steps in that direction last month, when it introduced Windows Live and Office Live. Windows Live lets consumers manage their e-mail, instant messaging, blogs, photos and podcasts in one site. Office Live enables small businesses to set up Web sites and e-mail systems, and to provide collaboration sites for teams. Both will be supported by advertising and perhaps some subscription fees.

In the future, Mr. Ozzie suggests, Microsoft will go further, offering parts of Office - like Word, Excel or PowerPoint - as Web services. "I think there are potentially different or enhanced ways that we can take things that have traditionally been done with the Office suite and offer that to customers," Mr. Ozzie said. "That's absolutely what we're focused on."

The new approach, it seems, is a striking departure from Microsoft's longtime practice of bundling more and more software features into its big integrated products. The bundling has not been merely a design preference, but also a business strategy. With more than 90 percent of the desktop PC market for operating systems and office productivity applications, Microsoft has bundled outstanding programs with mediocre ones, and all of them typically became the industry standards.

But Internet services represent a more open, competitive model. "Software itself is going to be free, and you get paid for services that are supported either by ads or by subscription charges," said Mitchell Kapor, the founder of Lotus Development who is president of the Open Source Applications Foundation, which develops free software for personal information like calendars and contacts. "For Microsoft, this is a bigger challenge than the rise of the Internet itself in 1995."

RECENT innovations have enabled Web-based software to look and respond more like desktop applications. Offering Internet alternatives to traditional PC programs are a new breed of start-ups, including Writely.com, for word processing; NumSum, for spreadsheets; and Zimbra and Scalix, both e-mail. I.B.M. has Web-based software called WorkPlace that is used by millions of workers. And Salesforce.com has built a fast-growing business by supplying customer relationship management software as an Internet service.

"No piece of software will replace Microsoft's Outlook, Word or Excel, but Web services will eat away at core areas of its Office suite over the next couple of years," said Marc Benioff, chief executive of Salesforce.com.

If that happens, Microsoft's business could be battered. Mr. Colony of Forrester Research predicts that Microsoft's profit margins, under pressure from Internet services, could fall by 40 percent or so over the next four years. A wild card is the hand that Google will play beyond search and how successful it may be. Mr. Colony, for example, says he thinks that Google will make a big difference. "I believe Google will revolutionize the software business," he wrote in a recent report.

Google has desktop search software and a Web-based e-mail service, two offerings aimed at parts of Microsoft's stronghold. How much further it plans to go in providing alternatives to Microsoft's software is uncertain, though it certainly looks interested.

Google was among the companies that attended a meeting last month at I.B.M.'s headquarters in Armonk, N.Y., of the Open Document Foundation, a group formed to agree on freely available formats for word processing, spreadsheets and other office documents; the idea is to come up with alternatives to Microsoft's proprietary Office formats. And for the last few months, Google has talked with Wyse Technology, a maker of so-called thin-client computers (without hard drives).

The discussions are focused on a $200 Google-branded machine that would likely be marketed in cooperation with telecommunications companies in markets like China and India, where home PC's are less common, said John Kish, chief executive of Wyse. "Google is on a path to developing a stack of software in competition with the Microsoft desktop, and one that is much more network-centric, more an Internet service," Mr. Kish said. "And this fits right into that."

For his part, Mr. Ozzie is curious about the plans at Google but is by no means obsessed by it. Google, he said, is "obviously a very strong technology company, and we'll see what they do with that."

Yet Mr. Ozzie's view is that Microsoft's fate is in its own hands. If it charts its technology and business plans wisely, harnessing the talents of its army of smart people, he said, it should grow and prosper in this next wave of Internet computing. He speaks of a thriving "ecosystem" of open competition in which developers and customers have many choices and in which Microsoft's future is not in crushing rivals but in becoming an attractive choice.

In the past, Microsoft executives have decried free software, with its collaborative open-source development style, as akin to communism, if not downright evil. Not Mr. Ozzie. "I consider open-source software to be part of the environment, like the Internet," he said. "It's not the enemy and it's not going to go away. It's great for developers.

"And if we don't keep continually updating our offerings and develop better offerings," Mr. Ozzie added, "then shame on us."

The Microsoft strategy, he said, has to be to develop tools and technology that make it easier to build software for the Internet-services era and easier for users to have more productive and enjoyable computing experiences. In a sense, it's a reinvention of old Windows vision of computing, but in a very different competitive context from the desktop world that Microsoft ruled.

The new game plan, Mr. Ozzie said, is "obviously not an altruistic thing, but it doesn't even resemble the environment of old."

December 12, 2005 at 07:35 PM in Microsoft | Permalink | TrackBack (35) | Top of page | Blog Home

Distinguishing Start.com From Live.com

Distinguishing Start.com From Live.com

By Mary Jo Foley

When we first heard about Microsoft's Live.com plans a few weeks back, most of us Microsoft watchers equated Microsoft's newly minted Live.com with its Start.com Web aggregator, which is currently in beta test. No one corrected us for doing so. But according to Microsoft blogger Sanaz Ahari, the MSN team doesn't consider the two to be the same. Start.com is more of an incubation tool, while Live.com is the future home of all of the new properties Microsoft is planning to ship under the Windows Live banner, Ahari says. Definitely a subtle distinction, but a difference, nonetheless.

December 7, 2005 at 12:25 AM in Microsoft | Permalink | TrackBack (16) | Top of page | Blog Home

IE flaw lets intruders into Google Desktop

IE flaw lets intruders into Google Desktop | CNET News.com

By Joris Evers
Staff Writer, CNET News.com
Published: December 2, 2005, 1:31 PM PST
A security researcher in Israel has found a way to steal information from unwitting users of Google's desktop search tool by exploiting an unpatched flaw in Microsoft's ubiquitous Internet Explorer.

There is a bug in the way the Web browser processes CSS rules, Matan Gillon wrote in a description of his hack posted on Wednesday. CSS, or Cascading Style Sheets, is a method for setting common styles across multiple Web pages. The Web design technique is widely used on many sites across the Internet.

The proof-of-concept method is an example of how security flaws in software can offer all kinds of access to programs on vulnerable PCs, including to Google Desktop.

"This design flaw in IE allows an attacker to retrieve private user data or execute operations on the user's behalf on remote domains," Gillon wrote in his description of the attack method. He crafted a Web page that--when viewed in IE on a computer with Google Desktop installed--uses the search tool and returns results for the query "password."

To exploit the flaw, an attacker has to lure a victim to a malicious Web page. "Thousands of Web sites can be exploited, and there isn't a simple solution against this attack, at least until IE is fixed," Gillon wrote.

Microsoft is investigating the issue, which it described in a statement as a problem affecting the cross-domain protections in Internet Explorer. "This issue could potentially allow an attacker to access content in a separate Web site, if that Web site is in a specific configuration," Microsoft said in the statement.

Microsoft is not currently aware of malicious code that takes advantage of the flaw, but is monitoring the situation, the company said. A security update or an advisory on the problem may be coming, it said.

Google is also investigating Gillon's findings. "We just learned of this issue and are looking into it," Sonya Boralv, a spokeswoman for the search giant, wrote in an e-mailed statement.

While Gillon in his example uses the IE flaw as a means to get to Google Desktop, this flaw and other software bugs could be used to covertly access virtually any application on a compromised computer.

"It is like any other flaw within IE, but he got creative and used it to launch Google Desktop to retrieve data," security researcher Tom Ferris said. "You can bet we will see this one being used to steal users' Quicken data, database files, etc."

Steve Manzuik, a security product manager at eEye Digital Security, agreed. "This definitely looks like a flaw in IE and not a Google bug. He is using Google Desktop as to retrieve data, but it is IE that makes it possible," he said.

While IE is vulnerable, Gillon found that Firefox and Opera are not. For protection, Internet users could use one of those browsers or disable JavaScript in IE, Gillon suggested.

It has been a busy week on the Microsoft security front. Four examples of attack code were released for flaws in the Windows operating system, and a Trojan horse is finding its way onto PCs through another yet-unpatched flaw in IE.

December 3, 2005 at 12:36 PM in Microsoft | Permalink | TrackBack (21) | Top of page | Blog Home

Creative Commons support from Microsoft!

Ray Ozzie: Really Simple Sharing

One other important point: We’re releasing the SSE specification under a Creative Commons license – Attribution-ShareAlike. I’m very pleased that Microsoft is supporting the Creative Commons approach; you can see more about this at in the licensing section at the end of the spec.

November 21, 2005 at 01:36 AM in Microsoft | Permalink | TrackBack (0) | Top of page | Blog Home

Groove Networks (Ray Ozzie)

Virtual Office, Desktop Collaboration Software, Secure File Sharing - Groove Networks

Microsoft Corporation acquired Groove Networks in April 2005; the company is now a wholly owned subsidiary of Microsoft, operating from its offices in Beverly, Mass. Groove products and its organization are now part of Microsoft's Information Worker Business Unit.

In closing the acquisition in April 2005, Microsoft said it initially plans to continue selling current and future Groove products on a standalone basis while also exploring ways to take advantage of our technologies in others ways.

Ray Ozzie, the founder of Groove Networks, continues to lead the organization, and also is one of three chief technology officers at Microsoft, reporting to Microsoft Chairman and Chief Software Architect Bill Gates. Ray founded Groove Networks in October 1997. The company shipped the first beta version of Groove in October 2000, and then brought the first commercially available version of the product to market in April 2001.

The company continues to sell its products and services through a direct sales force with offices throughout the United States, value-added resellers (VARS) in Europe, Japan and elsewhere, a workgroup sales team operating from the company's offices in Beverly, Mass., and via this web site.

November 17, 2005 at 12:57 AM in Microsoft | Permalink | TrackBack (3) | Top of page | Blog Home

Microsoft takes risk with Xbox

MercuryNews.com | 11/14/2005 | Microsoft takes risk with Xbox

BILLIONS INVESTED IN EFFORT TO SNATCH CUSTOMERS FROM SONY

By Dean Takahashi

Mercury News

As Microsoft prepares to launch its Xbox 360 video game console, the company is doubling down on its bets that video games will become an ever larger part of consumers' lives and that it can move beyond hard-core gamers to claim a big share of Sony's mainstream customers.

On Nov. 22, after four years of planning and billions of dollars at risk, the Xbox 360 goes on sale in North America, the first leg of its worldwide debut. Industry veterans predict that demand from the most avid game enthusiasts alone will be enough to make the console a top seller this holiday season. But they don't know how Microsoft will succeed with the broader group of consumers, dubbed casual gamers, who may prefer the Sony PlayStation 3 or the Nintendo Revolution coming next year.

``The wild card is whether consumers are really going to come out in the holidays for the Xbox 360 or just wait for Sony next year,'' said David Cole, analyst for market researcher DFC Intelligence in San Diego.

The Xbox 360 will have graphics that are better than anything on store shelves today, with more lifelike games designed to be viewed on high-definition TVs. It will be a digital entertainment and communications system that consumers can customize. But buying it isn't an easy decision for gamers, since the high-end version comes at a steep $399 and each game costs as much as $60.

Microsoft has created two versions of the new console, one with a hard drive that costs $399 and another without that costs $299.

From Chairman Bill Gates in Redmond to Nick Baker, the Microsoft hardware engineer in Mountain View who was a key chip architect for the new box, Microsoft's Xbox team started placing their bets on the Xbox 360, Microsoft's second version of the Xbox console, as early as four years ago.

But the broader effort to take a big chunk of the video game industry, now $28 billion in sales, started six years ago as a reaction to contain Sony's growth.

In the first round, Microsoft came in a distant second. Sony sold about 90 million PlayStation 2s, while Microsoft sold 22 million Xboxes and Nintendo sold about 20 million GameCubes. Nintendo has remained profitable, but Microsoft's cumulative losses in the video game business have topped an estimated $4 billion.

Broader vision

Microsoft is hoping to gain on Sony and make money this time by finding new ways to generate income beyond selling games. It hopes to generate sales from online tournaments, advertising and other online services that would boost Microsoft's long-term quest to control all online entertainment transactions in the home -- as consumers connect to the Internet via the game machine.

The stakes have only grown with the Xbox 360. Like a kid putting another quarter in an arcade machine, Gates anteed up billions for another round of battle. And engineers like Baker gambled that switching the Xbox 360's microprocessor to an IBM chip rather than an Intel one would deliver the processing smarts needed for more complex and intelligent artificial characters.

Microsoft's partners in the Xbox 360 venture -- such as game developers -- have also put themselves on the line. With games running $10 million to $15 million each to develop, a bad bet or two can steer a developer into bankruptcy.

Robbie Bach, chief Xbox officer, noted that this time many of Microsoft's big decisions were made lower down the ranks of the Xbox team, which topped out at more than 700 on hardware and 1,000 in game development.

One example was the choice of the microprocessor. Baker and fellow Microsoft hardware engineer Jeff Andrews, wagered that the best way to top the old Xbox was to create a chip that had multiple cores, or processing engines, on a single chip. This would make computer opponents in games far smarter, and it's why they chose IBM over Intel chips, which were in the first Xbox.

Microsoft also made a significant bet by signing up more contract manufacturers, hiring three of them to assemble boxes in China instead of just one. The bet is that outsourced manufacturing will be more efficient than Sony's use of its own factories. The move is enabling Microsoft to launch in North America, Japan and Europe in the same holiday season.

Another gamble Microsoft took was timing. Bach believes that Microsoft can gain ground by launching the Xbox 360 well ahead of next-generation machines from Sony and Nintendo. The risk of launching early: The new Xbox won't come with a blockbuster game based on Microsoft's hit franchise, ``Halo,'' anytime soon. Without that, gamers may not perceive the machine to be much better than what they've already got.

But the Xbox team figured that making the games run on high-definition TVs would set them apart. David Reid, director of Xbox 360 platform marketing, says the lack of ``Halo'' at the launch gives many of the other brand new titles a chance to rise to superstardom. About 15 to 20 titles will be ready by year's end, which is significantly more than either Sony or Nintendo have fielded in past launches.

Greg Thomas, head of Take-Two Interactive's Visual Concepts sports game studio in Novato, thinks the Xbox 360 lives up to its promise of enabling more lifelike games. He assigned a couple of developers the task of making uniforms for basketball players that would look baggy and flow like real cloth. It took them months to perfect the simulation for their basketball game for the Xbox 360.

Subtle differences

``It's not one big thing people will notice,'' Thomas says. ``It's a lot of subtle things that complete the picture.''

Whether consumers appreciate the subtleties will determine how well the consoles sell.

To broaden its appeal to more gamers, Microsoft is stepping up its investments in games. Microsoft Game Studios stole one of Nintendo's best game development companies when it acquired Rare for $375 million in 2002. Rare has made two of the three Microsoft titles that will be ready when the Xbox 360 launches.

For the Xbox 360, Shane Kim, general manager of Microsoft Game Studios, has opted for just a few titles with bigger budgets. One