Not being a religious person myself, I tend to take a skeptical, detached view of the various Google vs Microsoft vs Apple vs OSS fatwahs that fill the tech blog world. (Although I am pretty certain that if the Devil had a motto, it would be “Dont Be Evil”.) Nonetheless, the past week’s combination of leaks ( the Bill Gates memo and the Ray Ozzie memo) and announcements from MS were a minor epiphany. Not so much that “Software is Dead”, but that nobody is really interested in discussing whether or not this is a good thing.

As developers and good Americans of course we’re all in love with Google. Avoiding Evil is one thing, but they’ve also managed to stay away from Stupid pretty well, too. I’m a huge fan. But over the summer, when the business pages began to trumpet them as “The World’s Largest Media Company”, it sounded odd. Not only were they extraordinarily successful while giving me so much great stuff for free (Isn’t laying Golden Eggs supposed to be a terminal condition? ), but it also seems that they had gotten into the advertsing business on the side! Just as something like Google Maps realized a technological potential most of us had forgotten ever existed, they similarly resurrected the idea that you could make a lot of money on the internet by providing free services. Obviously, for those who see Google as the last best hope to make Bill Gates pay for his sins, their success is a vindication of good software and responsible business practices.

So what is the number one lesson Google’s main competitor has learned from this? Now that all the chairs have been thrown, and all the really really smart people are eating Microsoft’s lunch for free in the enemy’s cafeteria, what is the nature of this “adapt-or-die” change to the software world? Quote:

Today there are three key tenets that are driving fundamental shifts in the landscape – all of which are related in some way to services. It’s key to embrace these tenets within the context of our products and services.
1. The power of the advertising-supported economic model.
Online advertising has emerged as a significant new means by which to directly and indirectly fund the creation and delivery of software and services. In some cases, it may be possible for one to obtain more revenue through the advertising model than through a traditional licensing model. Only in its earliest stages, no one yet knows the limits of what categories of hardware, software and services, in what markets, will ultimately be funded through this model. And no one yet knows how much of the world’s online advertising revenues should or will flow to large software and service providers, medium sized or tail providers, or even users themselves.

The other two items on Ozzie’s list ( “The effectiveness of a new delivery and adoption model” and “The demand for compelling, integrated user experiences that ‘just work’) strike me as filler. The scare quotes around “just work” don’t make it seem any less awkward then it did the first time around. But for the first time working in this industry, I finally understand what services is: it’s the kind of software that can sell things to the user. It’s advertising.

I am by no means trying to say that advertising is by definition a bad thing. Some of my favorite things are brought to me by the good people at wherever. But if MS is in fact now committed to an advertising-based model, it’s fair to say that the momentum of this change to the software business is unstoppable and I think we (i.e. people who like computers and the internet) might want to go into this with our eyes wide open. It’s kind of scary that the leading edge of the discussion on what these changes may mean is going on in Redmond’s Exchange Server.

One question I’d like to hear asked is Will this make software better? Even if we’re able to meet the technical constraints posed by a Strong Server/Weak Client architecture, the fact is that user needs will now have to share resources with the needs of the customer paying the bills. If experience is any guide, the first vicitm of such a change would be a certain level “freindly hackability” that so many of us geeks hold dear in our favorite apps. We have seen what the current IP zeitgeist has wrought on stuff you thought you owned, imagine when you’re simply a guest of the Disney Corporation. Next time you’re at Space Mountain, ask them if you can drive. Also, for the past twenty years or so, vertical consolidation of media companies has been somewhat offset by the existence of the internet as a frontier of cheap production and distribution. What will be the consequences if the software industry now becomes officially part of the chain? How difficult, for example, will it be, a couple of tech generations down the road, to publish your own site without using a branded service?

Along with rich web apps and sacks of money, perhaps another of the dot com era’s internet visions is finally coming to pass at the moment we least expect it. The convergence of TV and PC. Yikes.

It’s almost enough to make you glad there’s Open Source.