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I asked Hachamovitch, who has led the Explorer team since 2003, why it has taken Microsoft so long to address these deficiencies. "It comes down to what we were doing with our time," he said. "Between 2001 and 2003 we were building what you experience now as Windows Presentation Foundation and Silverlight."

These technologies display not HTML, the language of web pages, but XAML, Microsoft's proprietary code for creating rich visual content.

The real culprit

This may seem like a forgone conclusion to many of you after seeing the W3C’s development timetables, but the real reason Flash and Silverlight exist is because the “open-web” people dropped the ball. HTML simply can handle what Flash and Silverlight can do. It has become increasingly stale for modern web development needs.

Here is some perspective, HTML5 has finally added a tag for handling video. Flash 6 came out in 2002 with video support! Where is the HTML version of Line Rider? It is in Flash and Silverlight now. If you want to see something really interesting check out Hard Rock Cafe’s memorabilia page (Silverlight 2 required) and tell me if you’ve ever seen something like that with HTML

The vision of application development that Microsoft promoted before the release of the Vista update to Windows relied on a three-part promise of superior communications, superior interactive graphics and a superior model of client-side storage. Delivering that combination, known at one time as the "three pillars of Longhorn," would have encouraged developers to think in terms of a rich Windows-specific application that exploited the client-side platform to define and deliver the user experience—while calling out to the Internet cloud for data and background services.

That was a powerful vision, but it was not delivered in anything like the time frame promised, nor were all of the pieces put together to complete the picture that had been so attractively drawn. The focus of developers has therefore shifted into the cloud itself, sometimes combined with client-side cross-platform logic using mechanisms such as AJAX—and decoupling application access from client-side platform choice.

People are agog that Microsoft has announced support for Open Document Format (ODF), but I'm not sure why. This was a foregone conclusion once Microsoft figured out how to move lock-in above the file level to the content network.

In other words, to Sharepoint.

Microsoft has been hell-bent on getting enterprises to dump content into its proprietary Sharepoint repository, calling it the next Windows operating system. I call it the future of Microsoft lock-in.

Google's search business will pass Microsoft's Windows business by early next year (at the latest). Good thing Microsoft has another huge, wildly profitable monopoly: Office. Add that to the calculation, and Microsoft can breathe easy for a few more years:

GOOGLE SEARCH vs MICROSOFT WINDOWS + OFFICE
Quarterly Revenue Q3 2006-Q1 2008

Of course, Google's visible in that Microsoft rearview mirror, too--especially now that it offers a product that is directly competitive with Office.

And then there's the most depressing comparison (from Microsoft's perspective). After 13 years of heavy investment, frequent doubling down, and--until recently--a browser monopoly, here's how Microsoft's online business is doing relative to Google's search business. Remember:

1. Google was founded four years after Microsoft launched its online business, and


2. Microsoft's search business is just a tiny piece of Microsoft Online.

When Windows has a real rival, Microsoft has real problems.

As Blodget notes, there are caveats: The unofficial Office monopoly should give Microsoft breathing room for a few more years. But even that could be threatened as Google's more-affordable Web applications improve.

This storm has been gathering for years. In 2005, we wrote a piece at News.com about Google's longterm threat to Microsoft. The impetus was a major management shuffle at MSN, but we had fun pulling out some old Microsoft memos about now-defunct Netscape in the early days of the World Wide Web. My favorite was a note written in 1995 by Microsoft engineer Ben Slivka describing a "nightmare" scenario for his company.

"The Web...exists today as a collection of technologies that deliver some interesting solutions today, and will grow rapidly in the coming years into a full-fledged platform (underlined for emphasis in the original memo) that will rival--and even surpass--Microsoft's Windows," Slivka wrote.

Microsoft didn't pay too much attention to the warning. Ten years later, another internal memo put a name to that nightmare--Google. Now Blodget has advanced that nightmare scenario a few more steps with his analysis.

Live Mesh as the next information bus

Imagine (not for long will it be ephemeral) an information bus that orchestrates the signaling of text, rich media, calendar, communications, transaction, and group location status under a social graph umbrella based in part on user-controlled behavior aggregation (gestures). Now imagine what Google needs to do to match this architecture and its overwhelming lead in connectors to existing hardware via Windows.

Google’s answer for now is no. There’s no need to attack Mesh directly, but rather continue to iterate on Officenomics while retaining its dominant leads in user credibility and advertiser cloud. But Microsoft can efficiently hybridize Google and other microbig services with the Mesh layer added, creating information bus fail-over to multiple streams (virtual devices) to insure enterprise levels of reliability and security.

But Windows Live Mesh is not just a way to synchronize files. That's just the sample app. It's a whole goddamned architecture, with an API and developer tools and in insane diagram showing all the nifty layers of acronyms, and it seems like the chief astronauts at Microsoft literally expect this to be their gigantic platform in the sky which will take over when Windows becomes irrelevant on the desktop. And synchronizing files is supposed to be, like, the equivalent of Microsoft Write on Windows 1.0.

It's Groove, rewritten from scratch, one more time. Ray Ozzie just can't stop rewriting this damn app, again and again and again, and taking 5-7 years each time.

It’ll be cheaper to put apps in the cloud than to run them on your own servers:

“It’s an inevitable business. The higher levels in the app stack require that this infrastructure exists, and the margins are probably going to be higher in the stack than they are down at the bottom … Somebody who is selling [business] apps is going to build in, more than likely, the underlying utility costs within their higher-level service. It will still be cheaper to do those things on a service infrastructure than it is on a server infrastructure.”

Taken together, these statements — by the company’s chief strategy officer, no less — add up to a huge strategic shift under way within Microsoft. They suggest that, in five years’ time, the company will be unrecognizable compared to today, with services revenues taking a significant share while licence revenues dwindle.