Microsoft: Web 2.0 is good for business

Business division executive Stephen Elop talks about how social networking, the iPhone, and Twitter affect business computing. Also: cloud-based Office is coming.

Updated at 10:10 p.m. PDT to correct amount spent on R&D. The correct figure is $9 billion. Also, updated at 9:10 a.m. PDT on April 2 to correct the spelling of Stephen Elop's first name.

During an on-stage chat on Wednesday at the Web 2.0 Expo, Stephen Elop, Microsoft's president of the business division, defended himself against conference instigator Tim O'Reilly's challenge that Microsoft's traditional office applications aren't making, and may not be able to make, a successful transition to the Web.

Elop, a slick spokesman for the Microsoft way, shot back that the lessons of Web 2.0 success, from companies like Wikipedia, are making their way into enterprise computing and Microsoft products.

"What's happening behind the firewall (in business settings) is identical to what happened on the Internet," Elop said. "The difference in the enterprise is that you can translate the value into something customers are willing to pay for. While social networks themselves may be challenged financially, in the enterprise, (Web 2.0) is working."

Microsoft's Stephen Elop says his company is successfully adopting Web 2.0 principles in its business products. James Martin/CNET

Elop pointed to SharePoint as the indicator of this success. It is "the fastest-growing product in the history of Microsoft, and it's because the principles of Web 2.0 are being applied to it," he said. Hammering home the message of SharePoint's value, he said, "for every dollar we earn, our customers get tremendous value, and there are seven or eight dollars for developers."

Microsoft is offering some of its apps as over-the-Web services, Elop continued. Nike, Coca-Cola, and other companies are paying for online access to Microsoft-hosted apps.

In product news, Elop hinted that an iPhone version of Office may be coming. It's "not yet" near, but "keep watching," he said. He also said a cloud-based Office suite will come soon, with limited features.

O'Reilly asked if it would be free. Elop's reply: "Ad-supported. Nothing is ever free." Features in the paid versions of the suite that would not make it to the free yet ad-supported product include integration with SharePoint and "unified communications"--features most consumers likely can live without. And when can we have it? "Beta code in not too long a period of time," he said, but "not this calendar year."

Other Microsoft products we'll have to wait a while for include a Twitter competitor. "We are experimenting," he said, "in a corporate setting." He said it was a big challenge to bring microblogging functionality into the business setting, where younger employees are avid boosters for the concept but older workers (who are sticking around longer due to the recession), "aren't even comfortable with e-mail."

Despite its apparent slow pace at adopting Web concepts in its products, Elop said Microsoft continues to invest in new technologies. "The only way through this economy is improving productivity. During tough times, we have to power through. That's why we have $9 billion in R&D. We have to continue to innovate."

Office Web Apps won't work offline
Consumers have to wait for Web-based Office