Microsoft's Windows 8 Could Be Company's Riskiest Bet

Microsoft CEO Steve Ballmer calls the next version of Windows the company's riskiest bet, while Ray Ozzie says Microsoft needs to embrace the cloud more than ever.

Microsoft CEO Steve Ballmer found himself confronted with a particularly hard question at last week's Gartner Symposium/ITxpo 2010: What's your company's riskiest bet?

"The next release of Windows," he told the inquiring Gartner analyst.

At first that response seemed odd-after all, Microsoft's latest operating-system release, Windows 7, has sold more than 240 million licenses in its first 12 months of release. According to analytics firm Net Applications, it currently occupies some 17.10 percent of the OS market, behind Windows XP at 60.03 percent and ahead of Windows Vista at 13.35 percent.

But the desktop-based Windows franchise could face major hurdles in coming years-courtesy of the cloud, which emphasizes applications based online, instead of a user's local hard drive, as well as more mobile form-factors.

In an Oct. 28 posting on his personal blog, days after the company announced his resignation, outgoing Microsoft chief software architect Ray Ozzie described a coming "inflection point" that will bring a future dominated by devices connected to the cloud. These devices, he wrote, will take forms beyond traditional desktops and laptops.

Despite Microsoft's recent cloud-centric advances such as Windows Azure and Bing, he added, the company finds itself at a disadvantage in particular segments. "Certain of our competitors' products and their rapid advancement and refinement of new usage scenarios have been quite noteworthy," reads the posting. "Our early and clear vision notwithstanding, their execution has surpassed our own in mobile experiences, in the seamless fusion of hardware and software and services, and in social networking and myriad new forms of Internet-centric social interaction."

Ozzie then backtracks a bit, to describe how Microsoft came to dominate much of the last computing paradigm.

"Windows may not have been the first graphical UI on a personal computer, but over time the product unquestionably democratized computing and communications for more than a billion people worldwide," he wrote. "Windows and Office truly grew to define the PC; establishing the core concepts and usage scenarios that for so many of us, over time, have become etched in stone."

That was for a PC-centric world, however, which Ozzie sees as passing rapidly:

"And so at this juncture, given all that has transpired in computing and communications, it's important that all of us do precisely what our competitors and customers will ultimately do: close our eyes and form a realistic picture of what a post-PC world might actually look like," he wrote. And a few paragraphs later: "We're moving toward a world of 1) cloud-based continuous services that connect us all and do our bidding, and 2) appliance-like connected devices enabling us to interact with those cloud-based services."

That will require Microsoft to adjust much of its current thinking, concluded Ozzie: "To deliver what seems required-e.g., an amazing level of coherence across apps, services and devices-will require innovation in user experience, interaction model, authentication model, user data and privacy model, policy and management model, programming and application model, and so on."

In his position has chief software architect, Ozzie had been instrumental in pushing Microsoft towards embracing a more cloud-centric corporate model. His projects included FUSE Labs, a unit focused on software connected to social connectivity, real-time experiences and rich media.

"Today's PCs, phones and pads are just the very beginning; we'll see decades to come of incredible innovation from which will emerge all sorts of -connected companions' that we'll wear, we'll carry, we'll use on our desks and walls and the environment all around us," Ozzie wrote in his blog posting. "It's the dawn of a new day-the sun having now arisen on a world of continuous services and connected devices."

If that future comes true, it could mean Windows needs to shift substantially in its next version in order to meet the coming paradigm. In June, a Website named Microsoft Journal posted what it described as a leaked Microsoft slide deck, detailing ideas for "Windows 8." The slides discussed possible features such as ultra-fast boot times, the use of facial recognition for logins, a "Microsoft Store" for downloading apps and fuller cloud integration.

"Windows accounts could be connected to the cloud," read one of the slides, followed with a bullet point: "Roaming settings and preferences associated with a user between PCs and devices."

In November 2009, the Website Microsoft Kitchen published a leaked deck of slides, supposedly shown by Microsoft during that year's Professional Developers Conference in Los Angeles, which suggested the next version of Windows Server and Windows 8 would see release in 2012. On Oct. 24, the blog Winrumors revived those rumors when it reprinted a posting from Microsoft's Dutch news site, hinting the next version of Windows will hit the street within the next two years.

"Furthermore, Microsoft is on course for the next version of Windows," that posting-subsequently removed from the Dutch news site-allegedly read. "But it will take about two years before -Windows 8' is on the market."

Whether or not that rumor proves accurate, the next version of Windows will show how much Microsoft chooses to take Ozzie's words to proverbial heart-and whether Ballmer's quote about riskiest bets turns out to be true.