I attended the Web 2.0 dinner hosted by Ray Ozzie , Gary Flake, and Yusuf Mehdi.

During the dinner there was a Q & A session with the Microsoft folks with John Battelle and Tim O'Reilly asking the questions. My notes below are heavily paraphrased since I took the notes on my phone.

Q: Over the past year the sentiment is slowly becoming stronger that Microsoft isn't the dominant player it once was. How does it feel not to be the big dog?

A: Yusuf -  It's great to be the underdog.

Q: How do you feel about some the new contenders in today's market?

A: Ray - The software industry is changing and Microsoft will have to adapt. Old business models are giving way to new ones and we will have to pay attention to them.

Q: MSN used to be a discarded group within Microsoft but now it is getting a lot of focus. How will MSN make a difference?

A: Gary - Web 2.0 is about software ecosystems and developer platforms. Microsoft and hence MSN, has a lot of experience when it comes to fostering developer platforms and software ecosystems.

Q: What do you think of the fact that big money makers like Office & Windows are imperilled by Web-based offerings and the new markets may not be as profitable as existing ones?

A: At Microsoft we are big believers in the value of Web-based services and the new business models they present. However we are also investing in our existing products like Office and Windows.

Q: When will we see office on the web? 

A: Ray - It is a process. It makes sense to move some stuff to the Web such as email but other applications such as graphics editing will likely be on the desktop for a while. We are still figuring things out how to strike the right balance.

Q: Will we see rapid development from microsoft?

A: Ray/Yusuf/Gary - It depends on the product. MSN ships software in timeframes measured in months. Other parts of Microsoft are in years. However how long something takes to ship really is a function of the complexity and maturity of the application. The more complex it is, the longer it takes to ship. After all, Netscape used to ship a new browser every couple of months back in the early days of the Web. Now things are a bit different. 

Q: Is groove technology going to show up in Microsoft products?

A: Ray - It's part of office and will go through all the things needed to make it part of the suite including consistent UI with other office apps and localization in dozens of languages. However the model of a smart client that harnesses the power of the network will permeate across the company.

Q: What about new revenue models such as ad-supported offerings?

A: Ray - The new paid search model was pioneered by overture and perfected by google. However ee as an industry still haven't fully figured exactly how much software can be ad-supported vs. paid.

Q: Are you guys buying AOL?

A: No comment.

Q: You recently launched MSN AdCenter, how do you plan to get new advertisers? Will it be due to access to high traffic MSN sites or by undercuting prices?

A: Yusuf - It'll be a little of both. There definitely will be something of a bonanza when it comes to purchasing keywords when we launch the system but in the long term the value of our ad network will be the high traffic from our sites.

Q: What assets does microsoft have that give it an edge?

A: Ray - We work better together across devices from mobile, PC, etc. we also have the experience of having both consumer offerings and business offerings.    

Q: Will there be a free ad-supported version of Office? Perhaps this is the answer to piracy in emerging markets?

A: Gary -  Show off hands, how many people want an ad-based office suite? How many people don't? [ed note -- a seemingly even number of people raised their hands both times]. See our problem? Ray - Ads aren't always the answer. It is one thing to show a user ads when they are looking for a product in a search engine and quite another to shove ads in their face when they are creating a document.

Q: In the past, Microsoft has locked user's in with proprietary Office formats such as .doc and .xls. Will the next versions of Office support open formats?

A: Ray - There have been two big changes in the next version of Office. The first is that the user interface has been totally revamped while the other is that the file formats are now open XML formats with a liberal license.

Q: Ray, are you having fun at Microsoft?

A: Ray - Yes!!! I thrive in startups and building ideas from scratch but sometimes my ideas are bigger than I can implement and now with Microsoft I have access to lots of resources. I am particularly impressed with the mobile platform, if you haven't checked out Windows Mobile 5.0, you should give it a look.


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