All Things Digital

If Oracle (ORCL) CEO Larry Ellison and Free Software Foundation founder Richard M. Stallman are planning a membership drive for their new Anti-Cloud Computing Coalition, they best not go knocking on Steve Ballmer’s door. Because the Microsoft CEO might not agree with their assessment of the Cloud Computing sobriquet as “complete gibberish,” “idiocy,” “stupidity” and “worse than stupidity.”

At an event in London today, Ballmer said Microsoft (MSFT) will debut its own “cloud operating system” at its Professional Developer Conference at the end of this month. “We need a new operating system designed for the cloud and we will introduce one in about four weeks, we’ll even have a name to give you by then,” Ballmer said. “But let’s just call it for the purposes of today ‘Windows Cloud.’ Just like Windows Server looked a lot like Windows but with new properties, new characteristics and new features, so will Windows Cloud look a lot like Windows Server.”

Ballmer offered few details beyond that, saying only that it will enable “light editing” of Office documents. Presumably, that means Microsoft still doesn’t see products like Office moving entirely off desktop PCs and onto the Internet any time soon. I imagine we’ll be hearing quite a bit about Software plus Services later this month.

A recent sampling of U.S. PC users by research outfit NPD found that 73 percent had never even heard of Google Docs, the search sovereign’s collaborative word-processing tool, or any other online productivity applications, for that matter. That may soon change, thanks to an embellishment that adds offline access to what had been an exclusively online app. Over the next few weeks, Google (GOOG) will begin enabling offline access to Docs, via Gears - a browser plug-in that can store files and data locally. Soon, Docs users will be able to edit their documents in the cloud and on the desktop in the same application.

The availability of an offline component for Google Docs might not convince businesses to standardize on Google Apps, but it will undoubtedly get them thinking about it a bit more. Certainly, Docs’ lack of offline access has been one of the biggest objections to the Web-hosted application. Allowing Docs users to work on their word processing documents without an Internet connection, gives them one less reason to export them to Microsoft Word.

In a May 1995 memo entitled “The Internet Tidal Wave,” Microsoft (MSFT) founder Bill Gates declared that the Internet was the “most important single development” since the IBM PC, one that was fast becoming a global communications and computing medium. “I have gone through several stages of increasing my views of its importance,” he wrote. “Now, I assign the Internet the highest level.”

Ten years later, he penned another memo–titled simply “Internet Software Services“–in which he warned of a “services wave of applications and experiences available instantly over the internet” that would reshape the traditional software business. “This coming ’services wave’ will be very disruptive,” Gates wrote.

And lucrative for those who were quick enough catch it. Salesforce.com (CRM), for example. Google (GOOG) and Amazon (AMZN), as well. Not Microsoft, though. Fearful of undercutting its fantastically lucrative packaged-software business, the company has been slow to enter the “software-as-a-service,” or cloud computing, market. Methodical, but still slow.

Now, with Google’s business-level hosted applications (Google Apps) gaining traction, Microsoft is moving a bit more quickly. The company dropped the 5,000 worker minimum on its Microsoft Online Services offering today, expanding the availability of Exchange Online, SharePoint Online, and Office Communications Server Online to businesses of all sizes. Especially, the smaller ones for whom Google Apps had previously been the only option …

We don’t think it’s a competitor to Microsoft Office. It’s casual and sharing, and a better fit to how people use the Web.”

–Google CEO Eric Schmidt on Google Docs and Spreadsheets, April 2007

We are not in this to get Microsoft. We are in this to offer more compelling choices for consumers and businesses.”

–Dave Girouard, general manager of Google’s business software division, April 2007

Soldiering on in its quest not to compete with Microsoft’s (MSFT) core office-productivity software business, Google (GOOG) last night added another component to its Web-based productivity suite–Google Sites. Created from JotSpot, the hosted wiki platform Google acquired back in 2006, Sites is essentially a lightweight version of Microsoft’s business-collaboration program SharePoint. It offers organizations a means of instantly creating a wiki-style group workspace, in which employees can collaborate.

It’s another powerful addition to the Google Apps suite, which already includes Gmail, Google Calendar, Talk, Docs and Spreadsheets and Page Creator. And it’s free. And if you think of “free” as a euphemism for “not robust enough for enterprise use,” you best think again. At least that’s what Google says, anyway. “The so-called lightweight cloud application isn’t for the non-power user,” Matt Glotzbach, product management director for Google Enterprise, told News.com’s Dan Farber. “It’s actually for the power user. Today’s power users aren’t writing macros. They are ‘power collaborators,’ grabbing content from six different places in the cloud and putting [it] on a site and sharing it.”

What was that Schmidt said about casual users again?

The changing of the guard at Microsoft as Bill Gates prepares to step down is becoming more of a mass exodus.

First, Bruce Jaffe, the corporate vice president responsible for Microsoft’s acquisitions, announces plans to leave the company at the end of February. Then Charles Fitzgerald, Microsoft’s general manager of Platform Strategy, resigns to join a start-up. And now, Jeff Raikes, the Godfather of Office, says he will retire as Microsoft Business Division president in September after 27 years with the company.

All three departures are blows to Microsoft, but Raikes’s undoubtedly weighs heaviest on the company. “While the cemeteries are full of folks who couldn’t be replaced, this is a big hole for Microsoft,” said JupiterResearch analyst Michael Gartenberg. “This will leave a big gap in the orb …”

It certainly will. Raikes has probably done more to shape Microsoft than just about any other employee, save Gates and CEO Steve Ballmer. He was instrumental in the creation of Microsoft Office, so much so that a 1997 email he wrote describing the strategy behind it was used as evidence against Microsoft in its landmark antitrust case. As Ballmer said in a note announcing Raikes’s departure, “Very few people have contributed more to Microsoft than Jeff.”

Raikes will be replaced by Juniper Networks’ Chief Operating Officer Stephen Elop.

The long-term shift toward Web-based software is apparently taking a bit longer than expected. According to a new survey from research outfit NPD, 73% of PC users have never tried a Web-based office productivity suite. And of those who have, only a paltry 0.5% have been impressed enough to abandon their desktop office applications.

“The survey results show not only that SAAS [software as a service] firms have a long way to go to build brand awareness and trust among PC users,” Chris Swenson, NPD’s director of Software Industry Analysis, told Microsoft Watch. “But it points to how powerful the Office brand still is, and how difficult it will probably be for most of these firms to dislodge huge swaths of Office users from the grips of Microsoft.”

It would seem, then, that while 90% of computing will someday reside in “the cloud,” as Google CEO Eric Schmidt recently claimed, it isn’t going to reside there for quite a while. “Maybe in the next 30, but not in the next five,” says Burton Group analyst Guy Creese, who suggests consumer adoption of SAAS will follow a path similar to that of consumer adoption of electricity in the late 1800s. “If you look at the electricity-adoption curve, it mimics what is happening now,” Creese explains. “People made their own electricity for the first 30 years. It was only in 1910, when Samuel Insull began creating electricity holding companies, that businesses and people decided it was easier and cheaper for someone to take over the task. If you figure usable PCs were invented in 1975, we’re about 30 years into a 50- to 60-year adoption cycle. People move a lot slower than technologists want them to; that’s why I think Microsoft’s ’software and services’ viewpoint is the less exciting but more sensible one.”

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns on Monday.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. Our Tech 10 appears below.

1. Bienvenue, iPhone: France Telecom has begun selling Apple’s cellphone at selected Orange stores in Paris and other cities. The device itself will cost about $1,106 with no plan attached, or 399 euros (about $590) with one of four “Orange for iPhone” plans, Computerworld notes, adding it will cost 100 euros ($148) to unlock the handset.
2. FCC Says ‘Uncle’: A proposal by Federal Communications Commission Chairman Kevin Martin to tightly regulate the cable TV industry has been “drastically” trimmed, reports the New York Times, which noted that Martin had sought more diverse programming and reduced cable costs.
3. Amazon: 1; Feds: 0. The federal government has lost its bid to compel Amazon to release details about the book-buying habits of thousands of its customers, according to Declan McCullogh on his blog, The Iconoclast. The Justice Department sought the information to prove its case against a former Madison, Wisc., city official accused of evading taxes in selling used books online.
4. Google, Online Snitch? The search colossus has voluntarily given the IP address of an Israeli blogger who used “Google Blogger” to allegedly slander municipal council members running for reelection, the Israeli Web site Globes Online reports, calling the move “unprecedented.”
5. YouTube, Censor? The popular video-sharing site has suspended the account of a well-known Egyptian anti-torture activist who posted videos of alleged brutality by a number of Egyptian policemen, Wael Abbas told Reuters, claiming that about 100 images he had sent were no longer available on YouTube.
6. But It Doesn’t Mind those CondéNet Vids: CondéNet is announcing today that it will distribute videos from its various consumer-interest Web sites via YouTube, The Wall Street Journal reports, adding that the deal is the latest in a series for Condé Nast Publications’ digital division.
7. LinkedIn Link to News Corp.? A “well-placed source” has told VentureBeat that News Corp. (owner of this site) is in talks to buy business-networking site LinkedIn. But LinkedIn CEO Dan Nye told Fortune’s Adam Lashinsky that “It would take a helluva lot” to get him to sell.
8. The Earth, Updated: Google Maps is updating its features, prompting Duncan Riley at TechCrunch to wonder if the new features won’t ultimately send Google Earth down the path of the dodo.
9. Feeling Insecure: Web applications and holes in Windows Office are the top concerns of Internet users, according to the annual security report by SANS, a computer training and security organization, in its Top 20 risk assessment for 2007.
10. How Green Is My Gaming? Greenpeace has released a report slamming Nintendo and Microsoft for making their video-game consoles with toxic chemicals, reports BusinessWeek, noting that the enviro group’s latest ranking of electronics firms this week also highlights questions over the environmental impact of the products and how much consumers care about them.

–posted by Associate Editor John Sullivan

The battle for supremacy in the online office productivity and collaboration space won’t be fought in the “cloud” as Google and IBM claim, but on the desktop.

Says who? Says Microsoft, that’s who. And with a 95% share of the productivity software market, according to research firm International Data Corp., who’s to argue?

This morning Microsoft announced Office Live Workspace, a Google Docs-style productivity environment that, unlike Google’s vaunted “Office Killer”, doesn’t include online versions of any of its lucrative Office productivity software. Not Word. Not Excel. Not PowerPoint. Office Live Workspace is not a hosted version of Microsoft Office. It’s an extension of it. If you want to use Office Live Workspace, you need to buy Office first.

The move is part of what the company touts as its “software plus services” strategy, essentially the idea that online services should enhance the desktop client, not replace it. Which, despite assertions to the contrary, seems a wise one considering Microsoft’s business division, of which Office is the linchpin, reported annual revenue of $16.4 billion for the fiscal year ended June 30. Can Google say that about Docs and Spreadsheets?

“Microsoft’s strategy boils down to this,” writes ZDnet’s Larry Dignan. “The client is still where the Office game is played, but Web services can extend the functionality. Translated into business sense that statement would boil down to this: Microsoft has a juggernaut in Office, but some folks may someday want Web applications. Microsoft is giving these people a reason to stay with Office.”

Value is returning to the desktop applications, and not simply through Windows Vista, but in the form of applications that are network service platforms. From the obvious, to music-sharing clients and development tools, there’s a resurgence of interest in resident software that executes on your desktop, yet connects to network services. Without a browser. Like Skype. Or Qnext. Or Google Earth. And Java? OpenOffice and StarOffice? If I were a betting man, I’d bet the world was about to change.”

–Sun CEO Jonathan Schwartz, Oct. 1, 2005

It’s been nearly two years since Sun and Google announced their “historic” partnership–“The Great Anticlimax of 2005,” as we like to refer to it around here–a union that some believed would push the Information Age off the desktop and onto the Internet. As it happened, the only thing the partnership pushed off the desktop and onto the Internet was a yawner of a press release announcing that the Google Toolbar would henceforth be available as a Java Runtime Environment download option.

But it was a first step. And now we’re finally seeing the second, which is quite a bit more substantial. Google has added Sun’s StarOffice productivity suite to Google Pack, its collection of free software applications. Now typically, the addition of a new app to Google Pack wouldn’t be particularly noteworthy. But StarOffice is a direct competitor to Microsoft Office; it’s a full suite of desktop-based office apps (and tools for Microsoft Office migration) that normally retails for $70.

And Google is reportedly paying Sun to offer it for free.

And it’s doing so at a time when many PC users are mulling an upgrade to Microsoft Office 2007. Which would seem to suggest that it does indeed have designs on Microsoft’s hugely profitable Office business, despite its “We are not in this to get Microsoft” protestations.

Contrary to Microsoft statements issued, oh, just about six weeks ago, Office 2008 for Mac will not ship by the end of the year. Instead, the first major release of the productivity suite since 2004 will arrive at market in mid-January 2008. “There was no one thing that caused the push—it was more of a perfect storm,” Craig Eisler, general manager of Microsoft’s Macintosh Business Unit, told Ars Technica. “The switch to Intel processors, the switch to different tools in the development stream, the switch in formats with Office–all of it presented different roadblocks for the team, and we wanted to make sure we could address all of those issues.”

And don’t forget company tradition. Microsoft postponed its initial shipment deadlines for Windows Vista and Office 2007, as well.

“As tough as it is, I firmly believe that this slip is the right call for MacBU,” Eisler wrote in a post to Mac Mojo. “Delivering Office at the right quality level is super important to the entire team and to Microsoft’s long-standing commitment to the Mac platform, and it was clear from our June and July quality checkpoints that no matter how hard we tried, we couldn’t release our product in time for the Christmas season with the kind of quality we wanted.”

So Microsoft will debut it right around the time of the Macworld Expo, Apple’s big conference and trade show, which is pretty much like Christmas for the Mac faithful anyway.