Microsoft CEO Ballmer on Cloud: We're All In

Microsoft CEO Steve Ballmer used a speech at the University of Washington to suggest that the company's strategy moving forward will focus primarily on the cloud. Ballmer cited a number of services and platforms, including Windows Phone 7 Series and Xbox Live, as particularly cloud-centric. Microsoft faces substantial competition in its cloud-based initiatives from a number of companies, notably Google in the areas of search engines and online productivity suites, and the question remains how its desktop-centric products such as the Windows franchise will change in order to meet what Ballmer sees as the new IT reality.

Microsoft CEO Steve Ballmer suggested during a March 4 speech at the University of Washington that, despite his company having made its fortune through desktop-based software platforms such as Windows and Office, the primary focus going forward will be on the cloud and applications derived from it.

"We shipped Windows 7, which had a lot that's not cloud-based. Our inspiration now starts with the cloud," Ballmer said. "Windows Phone, Xbox, Windows Azure and SQL Azure ... this is the bet for our company."

On the screen behind him, a logo of a cloud flashed up, superimposed against the words: "We're all in."

"Companies like ours, can they move and dial in and focus and embrace?" Ballmer asked rhetorically. "That's where we're programmed. You shouldn't get into this industry if you don't want things to change. The field of endeavor keeps moving forward."

Among the Microsoft cloud initiatives that Ballmer discussed: the creation of a cloud-based Office that would allow workers to collaborate and communicate, cloud-ported entertainment via Xbox Live, and the creation of what he termed "smarter devices" that would be capable of rapidly integrating new hardware and software that could interact smoothly with the cloud. He also cited Microsoft's cloud-based development platform, Windows Azure, noting a University of Washington project called Azure Ocean that apparently collects all of the world's oceanographic data.

The Windows Phone 7 Series, Microsoft's latest attempt at a smartphone operating system, was cited as one of those cloud-centric smarter devices. "Earlier [Microsoft] phones were designed for voice and legacy [applications]," Ballmer said, while Windows Phone 7 Series was designed to "put people, places, content, commerce all front and center for the users with a different point of view than some other phones."

Ballmer also aligned the cloud with search and Bing Maps, citing the reciprocal need of both those services to pull in information from users in order to "learn" and refine their fundamental actions. Bing Maps has begun integrating Flickr images into its Streetside feature, which presents an eye-level view of a particular environment; in an effort to present even more views to users, Microsoft is apparently experimenting with putting Streetside cameras on pedestrians and bikes as opposed to the roofs of cars, which can provide only a limited number of perspectives on a given street.

In a similar way, search engines such as Bing take the history information ported into them by users to better gauge ultimate user intent. "The ability of the cloud to learn from all of the data that's out there, and learn from me about what I'm interested in," Ballmer suggested, is one of the cloud's most fundamental dimensions.

Microsoft faces substantial competition in the cloud space from a number of companies, particularly when it comes to consumer applications. Apple's App Store, which Ballmer admitted was "a very nice job," has a substantial lead in the cloud-based monetization of intellectual property such as music and movies. Google, meanwhile, holds a sizable lead in the U.S. search engine market, while its Google Apps cloud-based productivity suite has been making inroads with government and businesses.

Google has announced plans for a dedicated federal cloud computing system sometime this year, a move that likely helped drive Microsoft's Feb. 24 announcement of Business Productivity Online Suite Federal, an online-services cloud for the U.S. government that comes with rigorous security underpinnings.

Ballmer's talk seemed to indicate that Microsoft will focus its competitive energies increasingly in these cloudy areas. What that alignment will mean for the development of the traditionally desktop-bound Windows franchise, the company's flagship product, remains to be seen; in a Jan. 31 blog posting on the Microsoft Developer Network,a project manager suggested that development of Windows 8 is already under way.