Cloud + Client

This week two giants spoke to the technology wave known as cloud computing. Larry Ellison called it a new label on what everyone is doing already. He acknowledged he was going along with it to keep his marketing and sales guys happy, but basically he called bullshit on it.

Steve Ballmer talked at a deep level about intelligent caching between the cloud and the client. Over an hour of snappy questions by Ann Winblad and Obamaesque nuance from the Microsoft leader let some significant cat out of the bag. No longer software plus services, the net of Ballmer’s signals was cloud + client. If you believe as Jason Calacanis does that we’re on the brink of a startup depression, the technology industry should be very very afraid.

Bill Gates has been thinking so far out ahead for so long that we’ve grown complacent in understanding how long it takes for Microsoft to reposition itself. Most observers still think the company is caught in an intractable wedge between the revenue of the Office group and the release cycles of Windows. The forthcoming Windows 7 announcements at the Professional Developers Conference just before Election Day in Los Angeles can already be understood as a point evolution, more like a service pack from the old Windows NT days when Redmond was trying to absorb consumer Windows into the IT server stream.

Back then, the twinkling in the eye of what became .Net was owned by the Exchange group, who by the accident of the competition with Lotus and Netscape in the Y2K messaging rollup was the owner of Outlook Web Access and a URL addressable hook into the file system. The server code that processed those requests was ASP.Net, and it was first released as a service pack upgrade to Internet Information Server. Within a year, Scott Guthrie had a Visual Studio plug-in that allowed rapid authoring of these applications, laying the groundwork for much of what Guthrie now owns as today’s service pack aka Silverlight and Mesh.

Service packs have always been where Microsoft performs its own jujitsu on itself. What they’re called is irrelevant; what they do is allow innovation and politically incorrect projects to get traction before the normally hyper-aggressive power brokers inside the company regain control and shut down the insurrection. By that time, the market has usually shown the new direction is strategic, and the changes are absorbed in a reorg. But the underlying reasons why these “skunkwork” projects break out are deeply understood by Gates, often years before they emerge in the dynamic of the time.

Steve Ballmer prides himself at underplaying his technical understanding, but he’s gotten away with it for years with Gates as Johnny to his Ed. Now, he has little cover, and at the Churchill Club on Thursday he didn’t bother to hide his command of the details: Virtualization, where he identified the classic Microsoft strategy of moving in and commoditizing the space from 5% to 80% market share. The balanced model of computation, from smart set top boxes to smart apps painted to dumb clients – Ballmer was not talking about plans but the tail end of execution.

Listen closely and he’s talking about applying the right amount of intelligence (software) at the right time. Gone is the software (read client) plus services (read cloud) mantra, discarded now as Windows is in the process of receding behind the user’s perception in favor of the applications that Gates says have always driven the success of the company. The service pack model for Windows 7 is being pushed to the cloud and virtualized, with updates streaming down to the user on demand rather than bundled on the dead DVD.

This is the SlingBox platform of application virtualization, and just because Google has pioneered it doesn’t mean Gates didn’t anticipate it years ago. Spray the bits onto a range of devices from phone to big screen, and neutralize the pain of migrating the hardware base with a Mesh/Silverlight OS that replaces Windows on the client with Windows in the cloud. Ellison is right – go along with the name change but stay ahead in the apps race by making the decision about where the code resides purely a function of caching and predictive push.

It’s like the Obama/McCain debate. Watch it live and McCain won. Watch the moments as sequences, ranked and streamed according to the logic of each section, and Obama won. Listen again to Ballmer and you hear a tough competitor, cagey and jovial, more relaxed than I’ve seen him in years. It’s the calm of the lion, relaxing in the shade and watching the world, his world, lining up.