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Microsoft's Mundie: A bottom-up approach to tech

newsmaker The high-ranking Redmond exec talks about spreading tech to emerging nations and the challenges of keeping software safe.

For a good part of 2006, Craig Mundie has been on a jet plane visiting Microsoft customers and political leaders in other parts of the world. His job: to manage the company's global research efforts and help direct Microsoft's longer-term strategy.

As Bill Gates manages his slow-motion farewell, Microsoft is preparing for the day when it will lose its biggest long-range thinker. That's why Mundie, earlier this year, was elevated to one of the most powerful posts within the company. Perhaps more than any of his peers, it is his job to make sure Microsoft remains focused on the big picture.

The task list includes sundry items like open-source software, privacy and security, as well as the changing concept of software in an increasingly Web-based service economy. And that's just for starters. CNET recently caught up with the peripatetic Mundie, one of the rare times he hasn't been airborne of late, to get an update.

Q: Here in the Bay Area, there's a lot of attention directed to Web 2.0, regardless of whether you believe that's just a slick marketing slogan or something else. Anyway, there's always a lot of chatter about what's cool and what's not. Do you think Microsoft is still a cool company?
Mundie: Well, yes and no. I think that our established businesses are something that are just extremely well-known and respected. To some extent, I think that's antithetical to cool. On the other hand, if you look at what we've done with things like Xbox and potentially what will come now with the Zune effort, I think it clearly demonstrates that for those audiences, the company can deliver cool things.

Preparing for the interview, I was re-reading the text of a speech you gave back in 2000/2001 at New York University.
Mundie: Yeah, the seminal speech on open-source issues.

Yes, indeed. You said something interesting, if I may quote: "The technology industry has to prove its commitment to privacy and security in order to encourage user acceptance of the technologies." Considering how many security glitches crop up and that the word "pretexting" has entered the common lexicon, how would you grade the industry's commitment to what you were talking about?
Mundie: I would grade the industry as not doing all that well. On the other hand, I would grade Microsoft as having made quite dramatic improvements. It (was) only shortly after I gave that speech at NYU that I also participated in launching what is called the Trustworthy Computing Initiative at Microsoft...I think it was that same November, or something, I gave a speech, and really, it was an entreaty to the industry to get more focused on these trust parameters.

I would grade the industry as not doing all that well (on security).

The reality is there has been very little uptake within the other companies and much less focus on it than we have here. It is a huge and challenging problem, and one where I'm proud to say I think the company has made great strides.

(Think about) the degree at which the hardening of our products is actually the reason that many (products from other companies) are beginning to be attacked. People move to where the weaknesses are, and as we've tightened things down, that phenomena is clearly observable now in other people's products.

You mentioned Trustworthy Computing. The company has invested huge resources, but hardly a week goes by that you don't hear about another flaw that you've got to correct.
Mundie: It's true. But if you look at the statistics, the arrival rate of these problems for us is actually declining fairly significantly. One of the acid tests for the company would be in the next couple of years. The first product that will have been through the complete new sort of design process that we've created under the Trustworthy Computing Initiative will be Windows Vista.

The same is true largely for Office 2007. While we still don't expect these things to be perfect, the degree to which there's defense in depth, I think it will be in some sense obvious to people when they sit and use Vista.

I want to go back to that speech. There's another, perhaps more commonly quoted, line where you talked about the viral aspect of the GPL (General Public License) posing the threat to the intellectual property of the organization making use of it. Have your views changed since then?
Mundie: No.

Mundie: Those speeches and a lot of the dialogue that ensued after it have actually forced a level of clarity around the use of the GPL. Certainly, enterprises who are now concerned about indemnity--this was something that they didn't think about before. I think that it forced the Free Software Foundation itself to come up with more clarity around the GPL, and to be clear about how aggressive the interpretation of that would be, relative to people building these composite products that had some GPL code within them. I think people are a lot more painstaking about this now than they were in the past.

I basically maintain the position that I had--even five years ago--that if you are not discriminating in your use of those type of licenses, you stand a substantial risk of either having a liability you didn't understand or potentially the loss of your own intellectual property.

You took over June 15 and became the company's external voice on technology. Any signposts yet that would define the Mundie Era? Is it too soon, or have you been able to put your stamp on operations?
Mundie: When we faced the prospect of Bill deciding to pull the trigger and have a migration out of the company and into the Gates Foundation on a full-time basis, we knew that it would be very difficult--if not essentially impossible--to just replace Bill.

So we decided to break his job into two parts and added the nearer-term technical coordination to Ray Ozzie's plate. We took the long-term strategy and policy and research and put them on my plate. The time horizon that I focus on is three to 10 years in the future. So, all of the business policy and technical issues, the anticipation of those things and the preparation for those things on that time horizon, are mine.

More long-term strategic items?
Mundie: Correct. Generally, the research folks are looking at stuff normally in a five-year or longer time horizon with no immediate requirement for productization.

Since the changes were announced, you've had a chance to think about what might be on that five-to-10-year horizon. Help me understand what is at the top of your agenda.
Mundie: The things at the top of my agenda now are really not that much different than some of the ones that have been at the top of my agenda for the last couple of years. I was the one who pushed the company into an aggressive expansion program in the emerging economy countries, for example. I've been the liaison to China for the last seven years, and India for the last four years, and Russia for the last three years. So in many of these countries where we're changing both our product line, organizational structure and business model, you could say that I've been the sponsor for a lot of that within the company.

Well, let's take that a little bit further. How do you think Microsoft needs to approach this issue of selling high-technology products to authoritarian countries or nations with anti-democratic traditions?
Mundie: Well, Microsoft software is used today in well over 200 countries. We operate globally with subsidiaries in something like 170 countries. So we encounter almost all forms of governance in that environment. Our view is that our job is to take this technology and make it available as broadly as we possibly can. And whether you happen to be pro-democracy or not, we do think that all of these issues are better off by having those people able to be part of the global community and have access to these technologies than not.

Do you think the criticism the Congress has leveled at you guys and Google and Yahoo vis-a-vis China is justified?
Mundie: Well, I think that it's a very difficult situation. All of those companies have tended to have the same view that the U.S. interests ultimately are better served by having our businesses present in those countries than not. Frankly, if you turned around many of the issues that we are challenged on, foreign companies that do business in the United States would have no choice but to answer the same way we do in those countries--which is that your business has to conform to the laws of the land in which you operate. It's really not optional.

You have to hew to the legal line that's placed in front of you in each country.

So if you start with the premise that our presence there is a good thing--both in terms of values and access to technology and trade--then just as any multinational does, you have to hew to the legal line that's placed in front of you in each country.

I do think that there have been problems at times where Congress finds it easy to look at these issues when they look across the ocean. But if you were a bit more introspective, you'd realize that we imposed some of the same constraints on any multinational that would operate in the Unites States, and so there's more symmetry there than you would observe in the way that some of the questioning was presented.

Let me turn to an organizational question. I remember that after Bill Gates announced his plans to do the slow phase-out, someone told us that one of the things that Microsoft may need to get away from is being too closely associated with just one person. Do you think that makes sense?
Mundie: Well, Microsoft is an iconic company. It was founded and led by an iconic leader in Bill. Our view is that the company has been developing an incredibly strong group of business and technical leaders, and to some extent, those people are less visible in this situation than they might have been in other situations in other companies, simply because of the star power that Bill commands.

I actually think whether it's a good thing or a bad thing is sort of irrelevant. With Bill electing to go and put his own energies in the next two years full time into the foundation, the company really has to see the natural rise, if you will, of these other extremely capable people. I think that that will be a fine thing. It's a completely natural thing. And in fact, I don't think there is any other alternative.

Is the challenge during that transition to make sure that things don't become too bureaucratic, for lack of a better term?
Mundie: Virtually all of the organizational and structural changes that will result from Bill's departure have already been made. Bill will be here, especially for the next year, with Ray and I in our jobs to make sure that we really have a graceful handoff, that we don't have any cataclysmic changes.

There are a few things to tidy up in the course of this year that we'll do, but I don't feel that there is any encumbrance that in fact Bill has internalized, and we've internalized that. His goal is to make us effective in our new role, and we are largely in that capacity now.

Then what do you see as the most pressing area for Microsoft?
Mundie: One of the things we've embarked on and will require diligent focus is the addition of the service components to all the elements of our business.

We have to be successful in rolling out the other components for these online businesses. We think we're pulling even, in terms of the search relevancy. We've moved to our ad platform. These are all things that we have to keep our eye on the ball, but we've been very focused on it the last couple of years. They're critically important.

The second thing: We're making sure that our products really have a good value proposition across the board, when they're going to be measured, in some sense, in contrast to what people think they can get either free or even, in the future, maybe ad-supported versions of these.

We may move to have some of our own products offered in that (free) environment, but I consider that as a component of having a service component of all of our traditional businesses.

Our products are used by people in virtually every country in the world, but in the aggregate, we really only sold those products effectively to the billion richest people on the planet. It's pretty clear that there's another 2 billion people who have disposable income and for whom technology is becoming an important and expected part of their lives, where in the past it wasn't.