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By Martin LaMonica, 22 March 2006 09:30

COMMENT 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.

Martin LaMonica writes for CNET News.com