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As Microsoft stumbles forward, is it a good idea to have its head in The Cloud?

By Rob Pegoraro
Sunday, July 18, 2010; G03

Microsoft has been having a lousy year. And the worst part of it may be that people aren't interested in its misery -- certainly not in this week of obsessing over Apple.

The company that once defined much of personal computing has spent the first half of 2010 suffering indignities large and small. Key executives behind some of the company's more successful recent efforts have announced early retirements; its unimpressive new Office 2010 software has seen ho-hum sales; and the stock market now values Apple more than Microsoft.

At a speech that kicked off Microsoft's Worldwide Partner Conference in the District on Monday morning, chief executive Steve Ballmer tried to put a positive spin on things. But a look at three topics discussed in Ballmer's speech and highlighted in product exhibits at the Washington Convention Center shows the kind of trouble the Redmond, Wash., company finds itself in.

In the interest of being nice, let's get the worst part out of the way first: mobile devices. In no other market does Microsoft look more lost at the plate.

Back in February, Microsoft publicly abandoned its Windows Mobile operating system when it announced that it was developing a replacement, Windows Phone 7, that wouldn't work with any hardware or software shipped for that older platform over the past decade.

Would-be buyers of Windows-based phones could only have been more confused two months later when Microsoft unveiled a different, equally incompatible line of smartphones under the Kin brand name. Was this the real hope for Microsoft's mobile efforts?

Evidently not: In July, less than two months after the Kin One and Kin Two debuted in Verizon Wireless stores, Microsoft terminated the entire project.

Meanwhile, Apple's new iPhone 4 -- reception issues and all -- and the latest crop of Google Android-powered smartphones have already vaulted past Windows Phone 7's promised features with such added capabilities as videoconferencing.

The picture isn't brighter in tablet computing. Back in January, Ballmer used part of his Consumer Electronics Show keynote to talk up "slate computers" -- small, touch-screen models running Windows 7.

Three weeks later, Apple introduced the iPad, which has since sold fantastically well. Meanwhile, HP -- the company whose prototype slate Ballmer displayed at CES -- seems to have quietly dropped that effort and looks far more likely to ship a tablet running the webOS software of its newly acquired subsidiary Palm.

At WPC, however, Microsoft seemed determined to plow ahead with the same slate vision as before, despite historical evidence of its riskiness (anybody remember the "Ultra Mobile PC"?).

Processing power and battery technology have advanced since that venture flopped in 2006, but it's still difficult to see how a Windows 7-based slate will outperform tablets based on such mobile operating systems as Android, webOS and Apple's iOS.

Microsoft seems better positioned in the area that made up most of Ballmer's talk: "cloud computing." This is the idea of moving your applications from individual desktops to Web-accessible servers that allow you to be productive and creative from anywhere and on any device with access to the Internet.

Some of the most public cloud-computing successes have come from Microsoft competitors like Google, but Microsoft is no slouch here. Its Hotmail Web service, for instance, still has more users than Gmail, its Bing search engine is providing Google with some respectable competition, and Microsoft has begun moving such core properties as Office to the Web as well.

But Microsoft is far more invested in traditional, disk-bound software than the likes of Google, and so it has a tougher job moving to The Cloud. (Ballmer referred to it as a monolithic, anthropomorphized entity so many times that I feel compelled to capitalize that phrase.)

That work is made harder still by its Internet Explorer browser's poor support for modern Web standards used by current and future cloud applications. The upcoming IE 9 should be far better -- but Microsoft will first have to coax customers who have held back on earlier IE upgrades to jump on this one. (Many companies still haven't dumped the horrifyingly obsolete IE 6.)

It would be unwise to bet against Microsoft's ability to succeed at cloud computing. But success here could come at a different price: Cloud services, by their nature, don't dominate people's computing experiences. They flit on and off the screen as you go from device to device. You may not even know or care what cloud operating system powers the Web application you use -- a key point of cloud architectures such as Microsoft's Windows Azure, Amazon's AWS and Google's App Engine is to let outside developers focus on the parts of their software that their users see and use.

The risk here for Microsoft isn't that it will stop making money or lose massive amounts of customers. It's that the company that once had people lined up at midnight to buy copies of a new release of Windows will become just another utility whose continued functioning draws little notice or praise from day to day.

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