Is Ray Ozzie up to the task?

Industry watchers say he's up to the challenge. "Ozzie is tremendously respected within the industry and within Microsoft, and he has the respect of Bill (Gates)," said David Smith, an analyst at Gartner. "The open question is 'Is Ozzie up to the task?' I can't think of anybody else that is better suited."

Bill Gates had wanted to hire Ozzie, credited with the invention of Lotus Notes, for years. He succeeded last year, when Microsoft acquired Ozzie's Groove Networks. On Thursday, the white-haired 50-year-old assumed Gates' role of chief software architect, giving him the massive responsibility for technical architecture and product oversight at Microsoft.

The move was somewhat foreshadowed last year, when Ozzie wrote a memo to Microsoft's senior leadership. Titled "The Internet Services Disruption," this type of strategic missive traditionally would have come from Gates, who instead penned a note that some have referred to as a cover letter for Ozzie's memo.

Just this week, Ozzie kicked off Microsoft's TechEd conference in Boston with a far-ranging speech on the future of technology that was reminicent of talks delivered by Gates in years past.

Ozzie is well regarded as a visionary and engineer. He started Iris Associates in 1984 to make Notes, the collaboration software still used by millions around the world. Iris was sold to Lotus, which was later acquired by IBM. Big Blue considered Ozzie and his team to be key to the acquisition. During the negotiations between Big Blue and Lotus, which began as a hostile takeover, CEO Lou Gerstner hopped aboard IBM's jet and paid a special visit to the Iris headquarters to present his case. It worked and Ozzie stayed around for the transition.

In 1997, Ozzie founded Groove, which made desktop software for collaboration and communication among small groups, and closely aligned his work with that of Microsoft, a Groove investor.

Prior to founding Iris, Ozzie worked on the development of Lotus Symphony and Software Arts' TK!Solver and VisiCalc, and did early distributed operating systems development at Data General. Ozzie earned a bachelor's degree in computer science at the University of Illinois Urbana-Champaign, near his native Chicago.

Gates and Ozzie together announced that Microsoft was entering the "live era" of software last November at an event in San Francisco. The company announced "Windows Live" and "Office Live," both seen as opportunities to gain revenue through online advertising and, perhaps more importantly, to compete with archrival Google.

Ray Ozzie

"That is a very important phase of Microsoft's future business," said Al Gillen, an analyst with IDC. "If Microsoft does not go down that route aggressively they are going to put their future business at risk."

Ozzie is instrumental in crafting Microsoft's strategy to tackle online services, software that will not only run just on the PC, but make use of the Net. Just after joining, Ozzie in June last year led a meeting of Microsoft's top 15 executives on how the company could conquer the Web. Gates wasn't even there, according to a recent Fortune story.

"He's already demonstrated the ability to lead when comes to Microsoft Live initiatives," said Michael Gartenberg, an analyst at Jupiter Research. "He's got a 20-plus-year track record of doing really amazing things."

Gates said on Thursday that he will work side-by-side with Ozzie throughout the transition period, but that a year from now, Ozzie and Craig Mundie, now chief research and strategy officer, will report directly to Microsoft CEO Steve Ballmer.

Ballmer and Gates had begun to have some succession discussions prior to Microsoft's acquisition of Groove, Ballmer said Thursday. "We expected a lot (from Ozzie) and things have worked out even better," he said.

In an interview, Ozzie said that during a spring retreat it became clear that some succession issues were being planned and that he was in for an increased role, though specifics were not discussed at that point.

In 1994, Gates honored Ozzie as one of seven "Windows Pioneers." He was also inducted into the Computer Museum Industry Hall of Fame. Ozzie is married and has two children, Neil and Jill. He lives near Microsoft's Redmond, Wash., campus, but still has a house in Massachusetts, Groove's home base.

CNET News.com's Elinor Mills, Ina Fried and Mike Ricciuti contributed to this report.