Traditional software models aren't going away, but major companies will have to learn to adapt more flexible, Internet-based application distribution models to both compete and meet evolving customer demands.
That was one of many nuggets Microsoft (Quote) CEO Steve Ballmer dished out to a packed audience during a keynote session at the Gartner Symposium/ITxpo 2006 here.
Entertaining more than informing, Ballmer was candid about the work Microsoft has cut out for it in competing with Google and Yahoo, search powerhouses intent on shaking the traditional software market from its moorings with software-as-a-service (SaaS) approaches.
Asked by Gartner analyst David Smith if the traditional software market as we know it has ended, Ballmer said there is a transition from software "as we have known it to forms in which it will be even better."
"I do think we're in a transition where software goes from being something that is essentially still in its pre-Internet days, to something that is what we call live," Ballmer said.
Live software, which will be pervasive over the next few years, is typified by "click-to-run" capability endemic of a Web site. The software platforms will still execute on a PC, but users will simply click them and run them "just as quick as a Web site."
Ballmer's case in point is Microsoft's Live effort, which the chief differentiated from SaaS as "software-plus-service," combining some of the features of traditional software with more modern facilities, including dynamic, Web-based delivery across the software giant's entire product line.
"The difference between software-plus-service and software-as-a-service... is really a question of will people want to use the local intelligence in mobile phones and PCs, etc., and we think the answer to that is yes," Ballmer said.
"So, you may click on something that's like a service and somehow instantaneously your processor locally or your hard disk locally are engaged.
"So when we say 'software' and 'service,' that's our way of saying service like simplicity and management with the rich capabilities of client-side software."
And there will be no flipping of the switch to dictate the move to the new-fangled software models, but rather a gradual infiltration of SaaS into the market, he added.
The CEO also said we haven't seen the last of major software projects, describing a world of "various muscle types."
This dynamic is comprised of fast-twitch muscles that can ship things every few months; medium-twitch muscles that can deploy in a year; and slow-twitch muscles that might switch every two or three years.
The CEO also chalked up the delay of the forthcoming Vista operating system and the failure of its original iteration, Longhorn, to trying to do innovation and integration at the same time, rather than trying to first innovate, then integrate.
Ballmer also argued that Microsoft is better positioned than most to deliver disconnected, loosely coupled technologies despite being a company who has traditionally tied everything back to the OS on a physical machine.
Ballmer said the company offers a set of end-user or consumer sets of muscles, as well as enterprise sets of muscles, marrying desktop technologies with those in the enterprise.
"The whole Internet phenomenon and software-and-service just takes that kind of sense of end-user empowerment to the next level, but there's still going to be a desire to balance that with appropriate IT management, control, compliance and security," Ballmer said.
Ballmer acknowledged Google (Quote) and Yahoo (Quote) as competitors, but argued that those companies are steeped in consumer software while Microsoft is better positioned on both sides of that consumer/enterprise coin.
He shrugged off the Google/YouTube acquisition deal, noting that it is copyrighted material that content owners will want distributed everywhere, including through Google, Yahoo and Microsoft search and entertainment platforms.
Ballmer said the top areas of growth for Microsoft for the next 10 years will be the desktop, server and enterprise market in total dollars and the online and entertainment segments in percentages.
The charismatic leader also said that Microsoft will thrive going forward through tenacity. He punctuated this statement by gritting his teeth, shaking his head and growling "the bone doesn't fall out of our mouth easily."