In 2005, Microsoft was warned by Ray Ozzie about an emerging advertising-supported business model that could disrupt their software dominance. As competitors like Google introduced cloud-based services, Microsoft debated moving Office online, a risky move that could affect short-term profits. Ultimately, CEO Steve Ballmer committed to this transformation, leading to the launch of Office 365 amidst early challenges. The transition exemplified Microsoft's history of adapting to industry shifts, underscored by the support Ballmer provided during the tumultuous early stages of Office's cloud transformation.
"A new business model has emerged in the form of advertising-supported services and software," warned Ozzie in his famous memo. "This model has the potential to fundamentally impact how we and other developers build, deliver, and monetize innovations."
"It was a gutsy call, it wasn't a popular call at Microsoft at that time," says Rajesh Jha, executive vice president of Microsoft's experiences and devices group.
"The early days of Office 365 were rough," admits Jha. Microsoft had to perform the painstaking transition of moving apps that were built for a different architecture and era to the cloud.
"I remember Steve [Ballmer] talking to me and saying 'I've got your back, go fix this stuff.'"
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