Bill Gates, Microsoft Corp.'s chairman and chief software architect, this week will address a critical challenge facing the company: making software that better suits the Internet.
Microsoft is holding a briefing in San Francisco Tuesday, at which Mr. Gates and Microsoft Chief Technology Officer Ray Ozzie will discuss the company's response to the trend. Though officials wouldn't comment in advance of the event, people familiar with the company's plans are expecting the men to disclose new plans for combining programs such as Windows and Office with additional features and services that can be accessed over the Internet or corporate networks.
The strategy could speed Microsoft's delivery of technical improvements, a sore point for customers waiting for major upgrades of important programs.
"It's a big change in the Microsoft business," said Rob Helm, director of research at Directions on Microsoft, a research firm.
Rick Sherlund, an analyst at Goldman Sachs, said Microsoft may discuss a version of Office that would be hosted on the company's computers and used through the Internet -- perhaps for no charge under an advertising-supported scheme.
Some Microsoft products already have an online component but as part of a reorganization last month, Mr. Ozzie was tapped to spread the work across all of Microsoft's major product lines. One easy step toward that goal would be to merge some of MSN's online service -- such as its Messenger instant messaging service -- under the Windows brand, say people familiar with the company. Microsoft already has merged its Windows and MSN groups under one umbrella as part of the reorganization last month.
The success of the strategy will largely hinge on Mr. Ozzie, a PC software-industry pioneer who joined the company six months ago when Microsoft bought his software company, Groove Networks Inc. In comments last week at an Internet-industry conference, Mr. Ozzie argued that software-based services are fundamentally changing the way people use technology and the Internet. As an example, he pointed to the way Apple Computer Inc.'s iTunes software and online store have worked to ensure the success of its iPod portable music player.
As part of the Internet push, Microsoft executives are expected to further use customer feedback to improve software and services quickly. In recent years, Microsoft has stepped up investment in a program called Watson that over the Internet automatically collects problem reports on customers' software. In addition, Microsoft's Windows Update provides updates to the Windows operating system when users link to a Microsoft Web site. Next year, Microsoft also is expected to offer an antivirus service delivered over the Internet.