Microsoft unfazed by competition from Google

'Good for us, bad for them'. That's what Microsoft's Chief Information Officer, Tony Scott, has to say to competitors like and Google. He is unperturbed by the sharpening edge of competition.

It is a temporary phase, he tells Kirtika Suneja, before Microsoft emerges the undisputed winner.

How has it been in India so far?

I keep coming to India as we have the Delhi and Hyderabad centres here.

How critical are these centres?

The Hyderabad centre's contribution to IT is big, and the team here delivers application development and support.

The operations team is an important group. . . I can't speak for rest of the campus, but from the IT perspective, we're responsible for all internal applications and the teams do development to support the applications.

The operations team manages networks and data centres as we move to cloud infrastructure. The Hyderabad team is in middle of all that.

You mentioned cloud computing. What is your take on public versus private clouds, especially when Google offers public clouds?

Microsoft will offer the most choices in cloud -- more than all competitors combined. So, in a way, it is 'cloud your way'.

If you want applications on cloud infrastructure that you or your partners host, you have that choice. There are companies in Microsoft's partner network that are part of the ecosystem.

The partner network is broad and extensive and can offer well-developed industry applications, like in healthcare clouds, which are emerging using Microsoft's technology.

Some are hosted by us and others are using the same technology that Microsoft is creating.

Our offering on the cloud infra is the broadest of all, globally, and they also tend to be very competitive because of such choices.

It is only one choice with some of the competitors. So, if you want to have your cloud, it's not there. Forget it.

You were talking about the two effects. . .

Yes. Pervasiveness and choice are the two distinguishing characteristics.

Other companies don't have the partner network and the presence or a long tradition of investing with partners and various kinds of businesses.

You mentioned healthcare clouds. . .

Everyone will be in healthcare because it's so big. But Microsoft has a long tradition of working with partners, and we have Amalga in this specific case.

What is you strategy for taking on Google, which has become your rival in many areas?

I'll give you the strategy from the IT point of view. Competition plays out in different markets and products, and the value for Microsoft is in the breadth of things we do and how we touch people's lives.

Whether it's Google or any other competitor, none of them has this breadth and can't offer the complete experience.

In the world of competition, you'll have this temporary sort of thing, but Microsoft has proven over and over again that it can supply technology to large markets more than anyone else can, which is more available and less expensive.

It is a great competitor and in Bing (Microsoft's search engine) we hope to have strong competition with Yahoo! and we will see who wins.

Has Bing started garnering marketshare?

Bing is picking up share in virtually every single market. It demonstrates that a lot of innovation needs to be done. Searches like pictures on home page and context selling have been pioneered.

That's fun and more can be done. There is significant growth at the expense of Google, which is really fun.

I don't want to make product announcements, but the history of Bing says that every few months new interesting things keep happening there.

Google changes in four to five years or will change a picture when it's Christmas But Bing has brought in a lot more innovation. There are many places that competition is imitating things in the space.

Where do you think gaps need to be filled in Bing?

Search and advertising is a numbers game. When you have a big marketshare, you draw attention and dollars, and we aspire to that kind of attention from advertisers.

I talk to hundreds of CIOs every year, but cloud was not near-tem relevant to them a year to two ago.

This year, my sense is that for the vast majority of CIOs, it's relevant -- how he can take advantage of the various forms of cloud technology in their space, like finished applications such as email or Sharepoint, or cloud as an application platform to develop business applications.

Other companies have launched operating systems for mobile and PC. How do you see this trend of software converging with mobile phones?

Competition has always existed in Microsoft's history and it makes you better at the end of the day. If a competitor does something, you innovate on your own.

For Microsoft, the most important issue in terms of competition is how quickly we can make products relevant to business, enterprises and time and time again, Microsoft has proven that it can do that.

Lotus 123 was the dominant spreadsheet at one point of time; a different browser was the interesting one at one time.

So, Microsoft has become the player of choice. This speaks of the breadth and amount of R&D that Microsoft does – We spend $9 billion on creating products and new spaces every year. So let's have some fun.

What about smart phones? Microsoft does not seem to be doing very well with them.

I'm really excited about Windows Phone 7 and have a version in my pocket. I've been travelling the world with it and it is a pretty damn good phone and a prototype. Wish I could give it to you to play with, but I can't.

It is a prototype. When will it be commercially launched?

I can't make a product announcement…  People tend to think of Microsoft as an operating system or Office.

One of the great things is that we have a complete set of other products -- in security, identity, manageability and finished applications -- which Microsoft does well and are profitable.

So, I want Microsoft on all of those products and increasingly, as a CIO, I will not need any external product.

The big trend is consumerisation of IT, and employees bring all sorts of devices in their office place.

So, we need a security infrastructure to manage and monitor what those devices are and if people are taking some important company information, we can have encryption on those devices and impose a pin. You can't leave your intellectual property around.

People think differently for a paper and a consumer device. A consumer device can be incredibly more easily compromised than a piece of paper.

Using Microsoft, we can manage a variety of devices and still ensure safety where IP doesn't get into the hands of people who shouldn't.

At Microsoft, we actually have a Macintosh business unit, so the first email exchange on the iPhone happened on our campus.

We support those products and devices on the campus. So, we have Microsoft employees working on Mac because their job is to make products.

My job is to ensure a safe computing environment. Another aspect is that most CIOs spend time on negotiating with Dell, HP, Lenovo for a very narrow set of devices and on purchase agreements and then to push out all those PCs.

At Microsoft, we have the largest variety of PCs you can imagine.

In a room with Microsoft employees, you will find different manufacturers, shapes, sizes, devices and we like that because when we test our products internally, we know it'll work on machines all around the world.

You go to Apple's campus, you won't see any other variety of device. On Google's campus, there is more of the same stuff. Good for us, bad for them.

The OS market in the mobile space is dominated by other players. Is that a cause of worry?

I think it's a temporary issue. I don't put a lot of face and snapshot and time into what is going on.

On a global basis, I see what is growing and what is shrinking. Text messaging is the fastest-growing on simple phones part of the mobile market.

That's where growth is. The smart phone part of the market, or the premium market, is in the downward part of the market. It will not be there for a long time in the future.

People want something that's simple. The design goal for the Windows Phone 7 is that with rich experience you get simple stuff easily.

Great keyboard or touch or both -- so you can have that. It is too early to talk about dominating, but I'm excited about it. Android coming into the market says there is room for more innovation and we see ourselves playing a role in that space.

People talked about the iPhone and thought that was the end of the world for OS. Windows Phone 7 will prove there is more room for innovation.

What is happening on the tablet PCs front? Apple iPad has caught everyone's imagination.

It has clearly created a new market in the IT context. But in the space of handheld devices, in business the context, it is nowhere.

Windows is embedded in the platform for medical devices and all kinds of rugged devices and different form factors.

If you've got to work in an environment that's hot, cold, damp, you won't find devices based on an OS other than Windows. It again speaks of the point that we offer tonnes of choice.

But you launched the tablet PC sometime back…

We did the software and IBM, etc, did the hardware. So, you will see Microsoft software for every kind of mobile. Windows was not the preferred OS and people thought this was the end of Microsoft, but it turned out otherwise.

Critics say Microsoft is an incremental innovator, not a rapid one.

I don't agree with that point of view. The history of Microsoft shows that we have created neat and novel products and SharePoint is a great example.

There are plenty of examples to show that Microsoft is an innovator. The history of invention shows where one person invents something and then refines it and makes it affordable, they tend to be the dominant players over time.

Image: Tony Scott