Microsoft released new search engine “Bing” yesterday, replacing their previous “Live Search” webapp. The main topic of this blog post is to dispute the arguments in “Microsoft Got the Yahoo! Deal All Backwards” By Anders Bylund; But before I get to that, I’d like to share a little anecdote.

Last night, I was telling a friend about the SNL Jeopardy skits. She had never seen those skits, so I spent a few seconds trying to describe them, and recall all the jokes, when I figured it’d probably be easier just to find the skits online and show them to her. So naturally, I went straight to Google and did my search. Unfortunately, the results were rather disappointing:

http://www.youtube.com/watch?v=I6dsmx8YmPs

Some sort of fan-made remix.

http://clamshare.com/videos/160/snl-jeopardy.html

Video gets corrupted at 1:07 point

http://www.nbc.com/Saturday_Night_Live/video/clips/jeopardy/1105261/

Clip is only available to US viewers

etc.

We were just about to give up, when I remembered reading about Bing that morning, and how it had some pretty good support for video search. So I did my search on Bing and actually managed to find the clips. (If you wish to see the SNL skit, I recommend this, this and this). So moral of the story is: Bing has its uses.

Bylund’s thesis is “Microsoft should just give up the whole Google chase and refocus on doing the things Microsoft is really good at. Operating systems, enterprise-class software, other software tools for consumers, and even a few lines of excellent hardware”. His main arguments seem to be that Microsoft hasn’t been doing well in the search area so far (pointing to Live Search as evidence), which shows that Microsoft doesn’t know what it’s doing in that area, which means it’s a big waste of money for Microsoft to try to invest in that area.

Bylund seems to be aware that his opinion is controversial (he writes “Yeah, you read that right”), but he doesn’t seem to show that he is aware of the strategic reasons for Microsoft’s investments, let alone provide information for why these reasons are invalidated.

“Software As A Service” (SaaS), Web Services (WS) and cloud computing are the very near future. Each term refers to a concept that heavily overlaps with the others. Together, they refer to the idea that the program you’re running doesn’t actually run on a computer that you own. Think of chat programs like MSN: You run the client on your computer, but the server, which actually lets you send messages to other people, runs on Microsoft’s computers.

MSN is kind of a borderline situation that many people would not call SaaS, so here’s a better one: Flickr. It used to be that the only way to store your images was to actually possess your own personal hard drive on which to store the data. And if you wanted to organize those pictures, you ran some a program on your computer like ACDSee, or Adobe PhotoAlbum. Now, with Flickr, you don’t need a hard drive to store your pictures on; Flickr will provide the “storage” service for you. And the program which allows you to organize and search through your pictures doesn’t run on your computer; instead, it runs on Flickr’s computers, and you just get to see the output of that program via your web browser.

WS allow collaboration to provide services to end users. On my blog, I list what XBox games I’ve recently played, and what music I’ve recently listened to. I didn’t enter this in manually, and I didn’t write a program which tracks my media consumption habits. Instead, there are already other companies which do this (Microsoft and Last.FM in my case), and they provided public APIs which allow my blog program to hook up and request this information from them. There are tons of app on the iPhone provide access to Twitter, Reddit, Tumblr, Last.FM and other popular sites. They didn’t re-implement Twitter, Reddit and so on themselves. Instead, they used the public API provided by those sites.

And it’s a good thing too, because I wouldn’t bother using a Twitter-clone on my iPhone, if it meant I could only tweet to other users of that same, specific iPhone app. I want to communicate on the real Twitter site, where I’ve already established an account, and where all my friends have already established an account. My application had better be connected. This is called the Network Effect, where an application is more useful, the more other people are using it. We don’t want our applications to become more and more fragmented. We want them more and more closely integrated.

Gone are the days where I’d have to send a spreadsheet or word document back and forth via e-mail, each of us needing a copy of Microsoft Office, and the organizational skills not to lose the document in our hard drives as several revisions are sent back and forth. Now we use GoogleDocs, where the documents are stored on Google’s hard drives, and the users only need a web browser; the spreadsheet program itself runs on Google’s computers.

Over time, we’ll gradually lose our traditional retail software. You won’t go to a store and buy a boxed copy of a program for a one-time fee of $60-$300. Instead, you’ll subscribe to the software online for an ongoing fee of $1-$20 month. Microsoft is already moving their Office suite online with “Office Live Workspace”, and they’ve been planning on moving their OS online for years. Just two days ago, they announced that you’ll be able to buy Xbox360 games online.

I already talked about how the greater integration provided by SaaS is good for the users. SaaS is also good for companies, because it reduces piracy and in the case of video game consoles, reduces the secondary market of used games. Of all the people you know who use Microsoft Windows (yourself included, if applicable), how many of them pirated it? Of all the people you know who use Microsoft Office (yourself included, if applicable), how many of them pirated it? Of all the people you know who use World of Warcraft (yourself included, if applicable), how many of them pirated it?

The answers I’m expecting is that almost everybody you know has pirated Windows and Office, but no one has ever pirated World of Warcraft. Why? Windows and Office are relatively easy to pirate, because the functionality you’re trying to get out of them comes from software running on your computer. If there’s certain functionality you don’t want (e.g. requiring a valid license), all you have to do is modify the software that’s already stored and running on your local computer so that it no longer has this undesired functionality (this is called “cracking” the software). In contrast, the functionality you’re trying to get from World of Warcraft does not come from software running on your computer. It’s coming from the servers that Blizzard owns. You don’t have access to those computers, and thus cannot modify the software that they are running.

Microsoft has tried to combat piracy, but most of their attempts are despised by the general populace (it’s easy to find complaints about Windows Activation, for example). People seem content with using SaaS, however, so this looks like an easy and natural solution for Microsoft to provide a non-intrusive path towards moving more of their OS and Office functionality to the cloud.

Bing is just one piece of the SaaS puzzle. Microsoft wants all of their services (OS, Office, Search, etc.) to integrate together, but they also want to control these services if at all possible, hence Bing. Traditional (non-cloud, non-SaaS) software, whether operating systems or office suites, are disappearing. Microsoft knows this, which is why it’s transitioning out of that market.

BTW, if you’re curious as to what a cloud-based OS would be like, the best implementation that I know of so far is Ubuntu One which tries to move some of the functionality of Ubuntu (a variant of Linux) to SaaS. My predictions for the next 10 years: all of our storage will be networked. You will no longer have such things as “16GB iPods versus 32GB iPods”. Your mp3 player will wirelessly connect to your music collection, so you can listen to any song you own at any time, as long as you’ve got cell phone reception there. You won’t say “I’ll send you that file via e-mail when I get home”, as all your data is available to you anywhere you have cellphone reception, so using your cellphone/PDA/pocketPC, you can just grant access to specific files to specific people where ever you are, whenever you want.