You should first read this article from wired magazine. Here is a snippet of the article:
MICROSOFT HAS BEEN in a funk since 2003. Its travails could be the subject of a Harvard Business School case study on the innovator’s dilemma. The company made – and still makes – billions selling desktop software, mainly Windows and Office. But the center of gravity has moved, and desktop software is about as cutting-edge as a nightly network newscast. Instead, Web-based apps are taking hold, and devices other than the PC – smartphones, iPods, digicams – represent the growth markets for software. At the same time, new business models, like search-based advertising and low-cost software subscriptions, are beginning to generate big money.
I agree with most of what the author is saying and with all of the inputs from important members of the Microsoft community. What I admire the most from the software giant is its ability to step down and say: “We’re in trouble and we need to do something about it”. This is impressive since, let’s face it, they are not in immediate financial trouble at the moment. It means that they are able to foresee the future and say: “Hey, at this pace, we’ll be obsolete in about 15 years”.
None of this is news in Redmond. In a 1995 company-wide memo titled “The Internet Tidal Wave,” Gates famously recognized the network as a disruptive tsunami. And starting in 2000, he tried to prepare his troops for yet another big shift, with a series of speeches on Web services. Even then, Gates was describing a world where desktop applications would eventually work in concert with high-speed apps delivered over the Internet. Among other benefits, he noted, “you should never have to enter the same information multiple times.”
However, Microsoft has the resources and they are not going to lose this battle without fighting back. The next 10 years will be some of the most interesting years in the software world… gearing software production towards the web and leaving the desktop more or less behind. I end this comment with a well worded quote from the article:
In 1995, Bill Gates foresaw the Internet tidal wave and pushed his company to adapt. At the time, that seemed prophetic. Today, Ray Ozzie is pushing the same thing, but this time it’s about survival.