Is Microsoft really going to reinvent itself into being a Web 2.0 company, or is it a dinosaur, attempting to get on the good foot but doomed to failure? Well, no monster the size of Microsoft is going to strive for the "less is more" philosophy that animates most of the 2.0 startups, and even having a visionary like Ray Ozzie aboard can't lead to a rewiring of the company's entire DNA, but they can still make changes to their huge installed base. So Ozzie's post about what he is hoping for in 2006 is interesting, in that he talks about having both worlds: the ongoing roll-out of upgrades to existing product lines, like Office 12, and also establishing a 'concept development' group to speed up innovation and experimentation:

[from Looking back, looking forward.]

I look forward to many things in 2006. The response to the ‘disruption’ memo has been frankly overwhelming, in a very positive way. Having worked with Kevin, Jim, Jeff and Robbie this month to finalize ownership of the key services scenarios, I now look forward to engaging these individuals and their teams who will lead this user-focused transformation to service-enhanced software. As a certain core group of people are well aware, we’re now in execution mode; it’s going to be a fascinating year indeed! Separately, I look forward to working with my brother Jack and his nascent “concept development” group to rapidly incubate many ideas that have been spinning around in our minds – some for years. These won’t initially be ‘products’ per se: they’ll range from fun hacks testing out a concept, to highly useful solutions. We’re talking about potentially setting up a website where you can download some of these things as they emerge; stay tuned.

I have argued earlier this year that Microsoft is beleaguered on many fronts, and that it seems to be losing several battles that would lead to the company becoming sidelined. (In particular, I believe that Apple Kaliedoscope -- a retooled Mac mini with DVR capabilities -- poses a real threat as the killer app in the battle for the living room, a battlefield that Microsoft has failed to consolidate despite numerous advantages.)

Ray is trying to reinvent Microsoft virally. Start a small innovation group doing things a different way, and maybe that can percolate out through the Cubeland that Microsoft has become, and change things. Maybe.

I am betting against it. The inertia of enormous success will continue to drag down the company's momentum. We will see lackluster releases of slightly improved products, we will see a migration to web-based apps but little innovation. Microsoft acts as if this is the end game, when its really just the opening moves of a completely different game, although using the same pieces.

Maybe Ray knows that, but I doubt that he can get it across to enough of the fat cats at Microsoft to make a difference. I predict that in 2005, Microsoft will lose on all fronts, and that it will continue along with its Maginot line mentality, waging a defensive war.

The open source stack -- LAMP (Linux + Apache + MySQL + PHP/Perl/Python) -- has become the basis of Web 2.0 development, and Microsoft cannot displace that. Web 2.0 apps are a decisive move away from the Wintel desktop, which Microsoft cannot effectively counter. Various web apps are being developed that will break the Office monopoly for the business desktop, and then what? What will be left when those millions of users begin to defect from Office, and move away from the Exchange/Outlook email platform? Microsoft looks likely to become the new IBM, like a boomer slowly turning into her mom as middle age encroaches.

In new areas, Microsoft has fiddled. MSN Spaces was late to the blogging party, Wallop has still not been released, long after social networking was hot. They missed the boat on social search: couldn't they have developed Technorati or Del.icio.us?

It's just one more proof that having money does not necessarily mean that you are smarter than others, or more likely to succeed. It's luck, generally. And it is merely an advantage in the game, not the game itself, and one that can be squandered, as Microsoft is demonstrating.

[pointer from Richard McManus]