COMMENT Telcos have been wanting to do this for a long time. Some of them are your customers. Doesn't this pose a conflict?
A: Our relationship with telcos is stronger than ever. As they have seen us be a proprietor of basic technologies that let them get into the video business, they are saying could their R&D department have done that? So they are seeing how they can incorporate that in and be a service provider beyond telephony. So their strategic plans are more dependent on how we get those things done, more than ever.
With Oracle buying Siebel, does that change your approach to the customer relationship management software (CRM) market?
A: Larry [Ellison] forecast big consolidation, and he wanted to see that come true, so he's making it come true. It's a brilliant forecast. If the next three people under you don't write code but they do deals, what do you get? You get deals. They will probably do more deals than anybody, and we'll write more code than anybody. We've been very serious about our CRM plans, including scaling that up to very demanding cases.
SAP is very strong in CRM and a good partner. Siebel was the original leader in CRM, and we have a good relationship with them. We'll maintain that, even though they are part of Oracle. A lot of what CRM is about is work flow, and we're building work flow deep into the cloud. You would have to say that CRM as a whole has not fulfilled some of the promise that was out there. So the fact that it is being repartitioned as an assumed part of Office and the platform - lots of it - I don't think that is too surprising. It never emerged as a clear-cut thing by itself quite the way that some people expected.
This morning, you were speaking about some of the tough problems that software hasn't solved - speech recognition, security, presence. What's holding us back from solving those problems?
A: The pace of software innovation today is as fast as it has ever been. In speech recognition, over the past decade, the error rates have come down, down, down, down. Now, we haven't hit that magic threshold where speech recognition is better than the keyboard. It's hard to pick a date where it will be. We totally believe speech recognition will go mainstream somewhere over the next decade. When you use your phone, speech will be your primary input technique. At your desktop, it will be a mix of speech, keyboard and pen.
Our money is where our mouth is. It's like IPTV. I said over a decade ago that would happen. It took longer than I expected but I'm sure glad we got in early and put the money behind it. I feel the same way about speech. It will be mainstream.
Let's talk about WinFS for a second. That's a good idea. But sometimes these really big ideas are difficult to implement when you have a really large installed base of customers, as Microsoft does, using various versions of Windows. That legacy problem seems to be an impediment to bringing new technology online. Does that get in the way of sweeping changes you'd like to make to Windows?
A: Well, that's the real world. We're in a very good position because we understand a lot of what is out there and how we can make moving up to the next thing very straightforward with the least amount of discontinuity. I've always been a big champion of WinFS. I was never satisfied that we were bringing it out as a client-only technology, and I was worried about that. Now we've chosen to skip doing it as a client-only thing and to do it as a big-bang client and server release. There's still a lot of work to be done on that one and that's all wrapped up in this next release of SQL Server. Those things are hard. They are fantastic when you get to them, because they greatly simplify things. It's the kind of thing that takes a company with a long-term approach on these things and willing to do something quite risky. The Office 12 user interface you saw this morning is another good example of that. Microsoft was willing to take that 2D menu structure that things are kind of buried in and blow that up. Here's Office, the most used software of all time, people are familiar and comfortable with it. Particularly our Office group that wants things to be exactly right. They decided it was time to step back [and do that]. There will be some shock among users. But pretty quickly [people get used to it].
Looking at the open source world, there's this movement away from selling licences toward selling support. A lot of people are participating in that, and you have been sceptical. Why? Do you think that's fundamentally the wrong model?
A: The industry will always be a mix of free and commercial software. So there will be a balance between those. I think that we are going to have a lot of both. There are some zealots that think there should be no software jobs, that we should all, like, cut hair during the day and write code at night. Should you take some of those extreme views, I think it's easy to say that's not right. There are things like compatibility and 24-hour support and taking big leaps like IPTV or speech recognition. The painstaking work over a decade that you have to do, that costs hundreds of millions or even billions of dollars. That's the commercial side. It's good at hiring people and selling licences and taking the risks that go with that.
I've always believed in low-cost, high-volume. It should be a cost that's so obvious that you should spend, because it saves you on personnel time, hardware, communications costs, which are gigantic when compared to the price of packaged software. That cost is almost a rounding error. The value you get out of the system is a lot larger than that. I don't just believe in a single model. There's a lot of neat things that can be done. But I don't think that someone who completely gives up licence fees is ever going to have a substantial R&D budget and do the hard things, the things too hard to do in a university environment. But that's OK. There will be a commercial software industry, hopefully, with companies that take the long-term approach and make the investments that drive those new breakthroughs.
Mike Ricciuti writes for CNET News.com
