Office 365, Ozzie Departure, Ballmer Tablet Talk Marked Microsoft Week

Microsoft's week included the resignation of chief software architect Ray Ozzie, the release of cloud-based Office 365, and CEO Steve Ballmer talking Windows tablets.

Microsoft took another big leap into the cloud this week.

On Oct. 19, the company released Office 365 in limited beta. Essentially a rebranding of the company's BPOS (Business Productivity Online Suite), Office 365 consolidates Microsoft Office, SharePoint Online, Exchange Online and Lync Online onto a unified cloud platform. The beta launch will involve a few thousand companies in 13 countries and regions, with general availability expected in 2011.

Microsoft CEO Steve Ballmer discussed Office 365 during his Oct. 21 keynote talk at the Gartner Symposium/ITxpo 2010 in Orlando. Pressed by Gartner analysts, he talked about the "tension" that exists between users who want constantly updated online applications and enterprise IT departments that need the cloud to evolve at a moderate pace. That dichotomy will apparently guide Office 365's roadmap in coming quarters.

"We need to design things that are extensible, transparent, and, therefore, allow for dynamic work," Ballmer told an audience mostly composed of CIOs, IT pros, and analysts. "As we plot the course forward for Office 365...we're very deliberately thinking through how to do both bigger bang releases and real-time cadence, and how that works for the IT department, and some users' desire for rapid change."

Despite Microsoft's history as a desktop-centric software company, it has recently embraced an "all-in" strategy with regard to the cloud. Much of that strategy revolves around offering cloud-based IT platforms and services to corporations, placing Microsoft in direct competition with both Web-centric upstarts in the mold of and cloud products such as Google Docs.

The early aspects of Microsoft's corporate cloud strategy involved products like BPOS, which bundled products such as SharePoint Online. By buttressing Office 365 with increased capabilities, Microsoft hopes to appeal to a broad range of businesses looking to potentially expand into the cloud. Office 365 is being sold at varying price points, in different configurations, depending on what's needed.

"Office 365 is the best of everything we know about productivity, all in a single cloud service," Kurt DelBene, president of Microsoft's Office Division, wrote in an Oct. 19 statement. "With Office 365, your local bakery can get enterprise-caliber software and services for the first time, while a multinational pharmaceutical company can reduce costs and more easily stay current with the latest innovations."

Over the next year, Microsoft plans for Office 365 to include Microsoft Dynamics CRM Online integration, as well as an "education" version tailored for school administrators and faculty.

Much of Microsoft's current thinking about the cloud evolved under the eye of chief software architect Ray Ozzie, whose resignation was announced by Ballmer in a companywide email Oct. 18.

"With our progress in services and the cloud now full-speed ahead in all aspects of our business, Ray and I are announcing today Ray's intention to step down from his role as chief software architect," Ballmer wrote in that email. "He will remain with the company as he transitions the teams and ongoing strategic projects within his organization."

However, Ozzie's departure date has not been publicly announced. Ballmer also noted that the position of chief software architect-previously held by Bill Gates-will not be refilled following that departure.

Ozzie's resignation makes him the latest in a series of executives to leave Microsoft. In September, Microsoft Business Division president Stephen Elop stepped down to take the CEO reins at Nokia. An earlier shakeup in the company's Entertainment & Devices Division saw the departures of both Robbie Bach, that unit's president, and J Allard, its senior vice president of design and development.

In his role as chief software architect, Ozzie had pushed Microsoft further into the cloud and social-networking spaces. Last October, for example, he announced the creation of FUSE Labs, a unit focused on software related to social connectivity, real-time experiences, and rich media. One product created by the unit,, allows Facebook users to create and share Word, Excel, and PowerPoint documents with .PDF support and full-text search.

During his keynote talk at the Gartner conference, Ballmer defended Microsoft's ability to proceed into the cloud without Ozzie. "We've taken a strategic direction anchored in the cloud," he told the audience. "That vision is our company strategy. It doesn't live in any one head or mind."

Ballmer also insisted that Ozzie's cloud vision now permeated every aspect of his organization. "If you talk to the people who work in our server division-which is really our Azure division at this stage-or with Office 365 or Bing, they're all in and they're all talented."

While seeming more than happy to talk about Microsoft's cloud initiatives, though, Ballmer was more reluctant to detail when the company would start pushing Windows-equipped tablets onto the market.

"Devices ship all the time," he said. "You will continue to see an evolution of devices. That's what you'll continue to see...there's a next generation of things that come with the Intel processors."

Ballmer added: "We believe in the diversity of the form-factor. We need a little help with the hardware, we need a little help with the software. We obviously get touch; Windows Phone 7 has a wonderful touch UI."

Microsoft's need to expand into new areas-driven by the success of competition such as Apple's iPad and Google Android devices-comes despite its success with more traditional product lines. This week, the company claimed that more than 240 million Windows 7 licenses had been sold in the twelve months since the operating system's release. That comes despite anemic spending by businesses and consumers in the wake of a global recession. Windows 7 currently occupies some 17.10 percent of the operating-system market, behind Windows XP at 60.03 percent, and ahead of Windows Vista at 13.35 percent.

That combination of high-profile success and failure-Microsoft has seen its share of the all-important mobile market drop over the past year, and suffered through expensive debacles such as the death of its Kin phones initiative-has made Ballmer a somewhat polarizing figure. However, when asked during his Gartner keynote whether he ever contemplated retirement, Ballmer hastened to shoot down the idea.

"I've got a lot of energy and passion for what I'm doing," he said. "If I ever thought there was a day when the company would be better off without me, I'd leave that day."