Microsoft, HP Make Moves to Take Back the Game

Last week Microsoft announced its new online extensions to Windows and Office called, coincidently, Windows Live and Office Live. These say a great deal about both Microsoft’s direction and the future of desktop software in general. In addition, HP announced an intent to eliminate the concept of the “IBM” PC and take Dell out in the process.

Microsoft Live

Let’s talk about Microsoft Live first. We should have seen this coming when Microsoft released Xbox Live a couple of years ago. This service, which integrated voice and provided a place where Xbox gamers could congregate to set up competitions, vastly expanded the value of the platform and was a good deal of the reason why Xbox screamed past Nintendo to challenge Sony for the lead in this market segment.

With the new Xbox 360, which is due out towards the end of this month and already sold out for the year, this experience will be vastly enhanced.

Xbox 360 Live

Xbox 360 Live, the first of the new Live programs to hit the market, will take the old Xbox Live program and pump it up several levels. By tying in instant messaging game players will be able to contact folks who aren’t even on the game system to set up games (yes, homework is probably toast) and players can also see what games their friends are playing at any given time.

There is an e-commerce model built in to the platform that not only allows Microsoft and other game providers to sell incremental upgrades and enhancements, it also allows gamers to create and sell specialized game elements like car paint jobs and character costumes.

In addition, the new product will connect to a variety of networked services, from the Media Center PC for TV programming to any PC for music. This music can then be tied into game elements so you can more easily listen to your tunes while playing a game. You can even hook up an iPod and use it as your music source.

In practice this simply turned the Xbox into much more than a game console and created the foundation for the integrated home systems that are coming. It did this by leveraging the Web and beginning the transformation of home computing and entertainment into an amazingly complete appliance.

Windows Live

Similar to Xbox Live, Windows Live starts out as a service. However its initial focus also includes service and support for Windows aggregating the various online Windows support resources into a single location. But it goes far beyond this to showcase the future of the Windows platform.

We have forgotten that Windows was never a product, it has always been a product bundle. Now Microsoft is expanding that bundle onto the Web. While initially there seems to be a lot of overlap between Windows Live and MSN, MSN remains the ISP, and with Microsoft effectively getting out of the ISP business, one can surely see the writing on the wall for that property: Windows Live will become Microsoft’s online presence for Windows users.

There are a number of services, starting from the customizable home page that goes beyond anything currently available to users from competing services (including MSN), to enhanced e-mail and instant messaging services with VoIP built in. This looks like an interesting product enhancement for the Windows platform, and because it is supported by advertising, it comes with little additional user cost (unless you want the premium service without the ads).

However the real plan is to connect Microsoft more strongly with its customers, following an Apple model and possible exceeding even that. The attempt is to create the same level of loyalty and customer satisfaction that Apple now enjoys. This will be much harder for Microsoft because they don’t do the hardware, but the effort should allow more people to experience Microsoft directly rather than through third-party resellers or OEMs. This should help Microsoft maintain better customer satisfaction if they execute well.

Office Live

Office Live takes the concept one or two steps further. Targeted at small business customers, Office Live initially provides similar levels of collaboration and communication support to what large companies can, but often don’t, provide for their employees.

This initially comes in three flavors.

Office Live Basics is advertising supported and provides basic e-mail, Web site, and remote storage services for companies of up to five people.

Office Live Essentials jumps to companies with up to 50 people and a better tool set coupled with a non-advertising model (you’ll be billed). The result appears to be very similar to the core set of applications large companies provide their users today.

Office Live Collaboration is an overarching service that goes with the other two with a broad set of collaboration tools.

Think of this as a way to create a blended platform over time, and one that will increasingly connect new features from a variety of Microsoft products to a new delivery model. With Apple expected to embrace full software delivery over the Web next, it is now only a matter of time before software essentially becomes a service.

Clearly these Live offerings were a direct response to the increasing threat and visibility of Google but Microsoft isn’t the only one stepping up to address the competition. HP last week launched new desktop blades which are cutting to Dell and IBM’s hearts.

HP Blades and the Sharper Edge of Competition

Much like Microsoft, HP has been aggressively looking for a way to make Dell chase them for a while and with their new PC Blade initiative they may have found it. If you stop and look down at your desktop PC, you will see a box not much different from the first IBM PC that came to the market in the ’80s. It’s about the same size, it makes about the same noise, and while it is more powerful it also only has about a half of the useful service life. Granted it is connected now, but it really doesn’t use that connection in any revolutionary way and it even has more security exposures than the first PC as a result of that connection.

A PC Blade potentially changes this and moves the PC into the current century. Originally pioneered by Clear Cube and most recently adapted by Hitachi, the HP PC Blade is arguably the most advanced in the market. Containing a unique and specialized AMD processor that marries strong performance with ultra-low power and heat (necessary for high density), you can put 280 of these HP blades in a single rack.

Tied to a thin client on the desktop, the user gets a product that is physically more secure (the data is in a remote secured area); quieter, since the clients are generally fanless; and more reliable — if there is an infrequent blade failure the user is automatically moved to another working blade requiring only a reboot to continue working.

Unlike traditional thin-client offerings which are known to have major cost and performance issues, PC Blades scale well because they give each user his or her own processor, memory, and OS. At some point servers will be designed to handle the massive load that a fully functional user puts on a system, but, until then, PC blades are the only way to get the benefits of a thin client without destroying the user experience.

Changing the Game

Back-ups, patches, and other administrative tasks are handled remotely and because there is a great deal of commonality with the blades, image management generally isn’t a problem. In addition, configurations like this typically provide a five-year rather than a three-year hardware cycle for most uses (power users will need to be upgraded more quickly).

Think of this as the hardware version of what Microsoft is doing with Live, using technology that came from the Internet to significantly enhance and evolve personal computer offerings. Also think of this as a look at what is likely to come as PCs themselves evolve into set-top box-like products with the reliability of telephones — not the current generation’s models, but the old Ma Bell phones that simply always worked.

Imagine a migration to Windows Vista with PC Blades. You’d simply reboot at your leisure after getting an e-mail saying it was ready and instantly you’d be on the new OS, if there was a problem you’d just go back to the old blade the same way. It simply becomes an IT problem, not a user problem, much like it used to be when we were on mainframes. Combining the best of the old with the best of the new is what we have been expecting for some time. HP can even pre-assemble the entire 280 PC rack and ship it out complete, potentially setting records with regard to hardware upgrade times.

With this solution HP can now argue they have the most complete desktop line ranging from traditional PCs and laptops, to standard thin clients, to these new PC Blades. Thanks to IBM selling its PC unit, Big Blue, the father of the PC, isn’t even in the running and Dell simply does not have the capability to create a forward-looking solution like this. Dell’s response was to offer standard PCs without hard drives.

With IBM passing its future to Lenovo and Dell warning on expected disappointing earnings, suddenly HP is back in the game again and they have their blades out with a clear desire to carve up their erstwhile competitors.

Now, with both HP and Microsoft, the desire to take back the game and own the fight is clearly evident. Of course it is up to these firms to execute, but regardless, the game just got a hell of a lot more interesting to watch.