Microsoft is marching to the sound of a new drummer.

Ray Ozzie, an outsider who was appointed one of three chief technical officers earlier this year, has just laid out a new vision for the company that challenges some of its most fundamental approaches to software development.

Bill Gates may still bear the title of Microsoft’s chief software architect – but it is Mr Ozzie, an industry veteran who first made his name with the Lotus Notes software product, who has set out the game plan for what comes next.

It amounts to little short of a call for cultural revolution at a company that was made in Mr Gates’ image.

In a detailed seven-page memo that challenges Microsoft’s army of software developers in uncharacteristically blunt fashion, Mr Ozzie has laid out why he thinks it is that Google, Apple and others are setting the pace on the internet, and why Microsoft’s own product development pipeline has become clogged – despite its massive $6bn research and development budget.

Written at the end of last month, and released to staff with Mr Gates’ blessing, the memo implicitly jettisons a central principle on which the Microsoft founder has relied in recent years. Mr Gates has pushed for “integrated innovation” – tight linkages between all of Microsoft’s products that make them work more smoothly together, something that would reduce complexity for users while also lifting sales.

The dream of less complexity for users, however, has resulted in a nightmare of complexity for Microsoft and handed Google and other internet-based companies the chance to race ahead. Microsoft has failed in carrying off some of its more ambitious projects, wrote Mr Ozzie, “in large part because of the complexity of doing such substantial undertakings.” He did not point to the next version to the Windows operating system, due late next year, but the long delays to that product have clearly made Mr Gates more willing to contemplate a new approach.

In place of integrated innovation, Mr Ozzie offered a new model for software development: the creation of “loosely coupled” pieces of software, produced quickly and linked together through standard technical interfaces, rather than the deep integration envisaged by Mr Gates.

Speed and flexibility, he added, are paramount. Releasing new elements of technology in the form of services over the internet – much as Google releases a new version of its search or e-mail service – would make it easier to get new ideas out quickly and refine them based on early users responses.

For good measure, Mr Ozzie also catalogued many of the technical innovations that have emerged on the internet in the past four years or so – none of them from Microsoft.

RSS, a technology for publishing information on the web, and Ajax, a development tool popularised by Google for creating applications that run over the internet, have set this standard for fast, lightweight technical development, he said. To make matters worse, he added, Microsoft has lost out to new start-up companies in areas where its technological leadership should have given it an edge.

Skype, the internet voice service recently bought by eBay, and the Blackberry portable e-mail reader made by Research in Motion were just two of those singled
out for special mention.

However, recognising how the internet has started to unleash a new wave of software innovation and responding to it are very different things. A decade ago, prompted to action by the rise of browser company Netscape, Microsoft was able to retake the initiative quickly by building its own browser into Windows – a tactic that eventually led to anti-trust action on both sides of the Atlantic.

This time, Google has a far bigger headstart, and many other companies have rallied around the new web-based development model. Taking back the initiative will also mean playing by the rules that Google has set, not those determined by Microsoft’s dominance of desktop PC software – an unusual place from which to start.

The blogosphere was already buzzing yesterday with scepticism about Mr Ozzie’s prospects of setting Microsoft on a new path.

“He has a hard job,” Dave Winer, the creator of RSS, wrote in his blog. “Turning Microsoft in 2005 is going to be much harder than turning them in 1995. The company is much larger, and more set in its ways.”

By giving such prominence to a new voice inside the company, however, Mr Gates clearly believes there is no option but to try.

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