May 1, 2007 / 1:09 AM / 12 years ago

Microsoft eyes more Web infrastructure services

LAS VEGAS (Reuters) - Microsoft Corp. (MSFT.O) plans to roll out a “very, very large” number of services to allow smaller Web developers to tap into its well-financed data centers, the backbone for its online strategy, the company’s top software executive said on Monday.

Microsoft Corp. founderman Bill Gates (R) listens to Ray Ozzie speak before an audience of Microsoft employees at their annual company meeting at Safeco Field in Seattle September 23, 2005. Ozzie, who replaced Gates as its chief software architect in June, said investment in data centers packed with computer servers, data storage and network systems would continue to grow in order to build capacity. REUTERS/Microsoft/Robert Sorbo/Handout

Ray Ozzie, who replaced Microsoft co-founder Bill Gates as its chief software architect in June, said investment in data centers packed with computer servers, data storage and network systems would continue to grow in order to build capacity.

Microsoft’s size and deep pockets allow it to build huge data centers like its new facility in central Washington state — big enough for seven soccer fields of computing equipment — and then lease out usage of the equipment to smaller Web developers.

“At a principal level, we’re going to be working on and releasing more things that transfer our (economies of scale) to developers, particularly small developers,” Ozzie said in an interview with Reuters. “The number of services ... we are going to offer is going to be very, very large.”

The company unveiled on Monday Microsoft Silverlight Streaming by Windows Live, a streaming video service that stores and hosts video for its new Silverlight online media platform, at its MIX 07 conference for Web developers and designers.

It is one of the first applications introduced by Microsoft to allow developers to make use of its Web infrastructure.

Online retailer Amazon.com Inc. (AMZN.O) has already rolled out services aimed at allowing other companies and developers to build Web services on top of its infrastructure.

Ozzie, who joined Microsoft two years ago after it bought his collaboration software company Groove Networks, said Silverlight Streaming would serve as a model for how it plans to make money from other infrastructure service.

Once the service is formally launched, Microsoft will keep it free for light users but ask heavy users either to allow Microsoft to sell advertising space in exchange for unlimited usage or pay a nominal fee.

Microsoft’s growing data center investments are not based on a huge amount of speculative risk, according to Ozzie.

“It’s going to be a growing thing, but it can grow in a way that can track usage and profitability. It’s not something we have to ridiculously overbuild in advance,” Ozzie said.

Microsoft investors are carefully watching its growing operating expenses from data centers, because it is a shift from the low capital expenditures associated with software.

It is also a major strategic shift for a company that built the world’s largest software company by selling software installed on a computer’s hard drive.

Now, Microsoft faces a threat from companies like Google Inc. (GOOG.O) to deliver software similar to its desktop applications as a service through the Internet browser.

Microsoft’s “Live” online services are aimed at augmenting its dominance in desktop software with a host of new Web services. To that end, it rebranded many of its Web properties, including changing the name of Hotmail to Windows Live Mail.

Ozzie said the focus of Monday’s announcements at MIX were focused on developers, but there would be a “Wave 2” of Windows Live services later, though he did not give details.

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