Microsoft has revealed its new services strategy, what's it's calling software plus services as opposed to the industry-wide term software as a service (SaaS). 

Speaking to financial analysts last week, chief techical officer Ray Ozzie said that Microsoft's services architecture starts with the platform of Global Foundation Services.
"This is a physical layer of our services infrastructure that includes our datacentres, the racks of computers and disks that are inside those datacentres, the network that connects them to the Internet, and the people who build and operate these datacentres and maintain them and monitor the activities that are going on within them.
"The datacentres are of massive scale. There's a number of them. They're built with commodity components, and that's how you get the cost down, and they achieve reliability through redundancy, not the fail-safe nature of any given component within the datacentre," he adds.
The next layer is what Ozzie calls the cloud infrastructure services layer.
"And this is the most fundamental software level of the services infrastructure. You can think of this as a utility computing fabric upon which all of our online services run. Among other services, this fabric has an efficient and isolated virtualised computation layer.
"It has application frameworks that support a variety of app models that are designed for horizontal scaling. And it has infrastructure that manages the automatic deployment and load balancing and performance optimization of the apps that it's managing running on its infrastructure."
The software level also supports several types of horizontally-scalable storage types like files and database, searchable storage and networking services.
"The next layer up from there is something that I refer to as the Live platform services layer," Ozzie continues. "These are services that are designed specifically to serve the needs of apps, of our apps predominately, that target individuals and very small businesses, unmanaged users.
"These are generally ad-monetized applications, and because of that, there's synergy in sharing data and features among the apps at this level. And so they all share many, many of these services."    
 On the consumer front, Ozzie says the services opportunity lies in connected entertainment.
"From the sharing and publishing of personal media, news and information, the multiplayer gaming, our services platform will enable us to rapidly develop and deploy new consumer services as well as services that attach to our existing PC products.
"It'll also act as an experience hub, enabling us to observe how and why consumers use the different properties and to refine these services quickly and make them better, and also to optimize the advertising and better target the users based on their activities, respectful of their privacy."
For information workers, he says, the services opportunity lies in connected productivity scenarios, he adds. These would include seamless Office scenarios that span the PC, the Web and the phone.
For IT professionals, especially in the enterprise, the services opportunity lies in the realm of cost savings.
"For enterprise IT in the short term, this is mostly going to be about moving IT infrastructure to the cloud, either in whole or in part," says Ozzie. "Things like e-mail or content management, information sharing, and so on. Enterprises come in all shapes and sizes, and their requirements vary considerably. And they'll think about the transition to services on different tempos."
Microsoft's value proposition, he adds, is the ability to offer companies a choice of services.
"Number one is on-premises servers, which will give enterprises the ultimate in customization and control and dealing with regulatory issues; number two is partner-hosted services, where customers can take advantage of any given partner's unique vertical expertise or vertical solution; and number three is Microsoft's own services in the cloud, in our datacentres, where our services will likely be much more horizontal in nature and where we'll take a platform approach to it and offer the lowest, lowest possible cost that we can.
"Choice is a substantial differentiator for us, the ability to offer these different approaches to the enterprise. And we'll be very, very well positioned as enterprises get more and more and more into a services mind-set in the upcoming years."
 For developers, Ozzie says the services opportunity lies in the breadth and character of this new type of platform.
"At the back end, the promise of services for developers is the promise of utility computing in the cloud. This enables them to run applications and store data at very, very low cost, for all practical purposes, with infinite capacity that's shared with other people like themselves.
"Big companies will find this useful, especially for their customer-facing systems in handling demand spikes like holiday demand. They can essentially share capacity with many, many other companies who are also sharing a number of different needs. Small companies are going to find value in handling the surge of demand that occurs at the introduction of a new product, or improving performance globally where they might not have been able to do that in the past.
"At the front end for developers and designers, the promise of services is in rich Internet applications, applications that span beyond the limits of the browser and are designed to run video and rich interactive media."