Microsoft's Mundie on the Next Big Thing

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Craig Mundie, 59, is Microsoft Corp.'s chief research and strategy officer. He assumed his position as chief visionary in June 2008 after Bill Gates retired from day-to-day operations at the company.

In his current role, Mundie is responsible for the long-term strategic direction of the business and recently completed a technology tour of U.S. colleges. Microsoft Research has 800 researchers in six locations worldwide. The company plans to spend more than $9 billion on R&D this year, up from $8.2 billion in 2008. An edited transcript of Computerworld's recent meeting follows.

CW: Microsoft announced some belt-tightening recently. How will that affect the R&D budget and your priorities? Will you scale back on basic research, as some competitors have?

Mundie: No. We have an opposite view on that, which is the tighter the economic times, the more the focus has to be on maintaining your R&D investment broadly. You want the normal cycle to produce timely results, but we've always believed that the pure research component was critical to us for several reasons. It gives us the ability to continue to enhance the businesses we're in. It gives us the ability to disrupt certain industries that we choose to enter [and] it's a shock absorber that allows us to deal with the arrival of the unknown from competitive actions or other technology breakthroughs. In these uncertain times, all three of those things are important to us.

CW: So, no substantive changes despite the economy and staff cutbacks?

Mundie: Yes. We did our first cross-company layoff in January -- about 1,400 people -- and we'll continue to make adjustments up to a total of 5,000 people in the course of the next 18 months. But a lot of this is not strictly cost restructuring but a resource reallocation mechanism in order to fund the things that we think we need to grow.

We believe that the economy is heading for a reset, not something from which there's going to be a nice, quick, happy rebound. We've taken our cost structure down to a level that we think is sustainable against that kind of economic outlook.

There are several different ways we seek to insert innovation into the products. First, we develop new features for the products we have. Second, we create new products and put them alongside the products we already have.

For example, we created OneNote because we thought there was going to be a new requirement for this type of more preformed "notebook/handwriting/aggregate everything" type of capability that didn't fit naturally within the mission of Word, PowerPoint and the other products that are part of the Office suite. So we put a new product in there. That didn't create any new compatibility problems but produced a whole new capability.

As we look in the platform and tools areas toward the future, we expect that there's a lot of change coming in the underlying architectures -- for example, like virtualization and the fact that there will be many CPU elements that actually allow some of the side-by-side execution of things. That can provide perfect compatibility while still allowing the introduction of things that represent whole new capabilities.

CW: Have you ever been disappointed that a great technology didn't take off as well you expected?

microsoft mundie
Mundie: One of the biggest areas I championed in my early years here in the early 1990s was interactive broadband television. We had many of the ideas, perfected a lot of the technology in the '90s, and we're sitting here in 2009 just starting to see a significant global ramp-up of that as a successor to traditional television.

It's certainly been a disappointment to me that the collective things necessary to make that happen -- for example, broadband network penetration and performance and things like that -- have lagged so far behind globally, and especially in the United States. Things that are very interesting technologically for the user are just not being brought to market at the speed I would have hoped for.

CW: But users are consuming more television programming over the Web these days. Are we really that far away from your vision?

Mundie: If you're looking at the big-screen experience, is it actually being delivered over a packet-switched network with a basis of interactivity and two-way communication? That's what I call full-tilt-boogie IP TV, and it's still ultimately the solution that people will come to use.

Given that that largely hasn't become available yet, and that we have so many people growing up with a lot of comfort in the use of PCs as media playback devices, we're starting to see people seeking that kind of network entertainment experience, delivered on demand and over the network. The business model there tends to be more ad-supported than subscription-based. For some people, that does represent access to content that historically they had to pay a [cable TV] network subscription fee for, and they're now able to get back into the ad-supported model.

In a way, it's a bit like the new world surrogate for over-the-air television. All the major networks in the United States are free over the air all the time, yet very few Americans watch them because the experience isn't very good, the shift to digital has not taken place, and there is limited content availability.

None of those [problems] exist in Internet access to that media. There's no limit on shelf space, you can have as much differentiation as you want, there's no rigorous timetable that you have to watch in prime time. So many of the things people covet in their entertainment experience, they can get today in what people call "over the top" or over the IP network access to the media. I think of it as the contemporary surrogate for free-to-air television.

CW: What is your proudest R&D achievement?

Mundie: I did a lot of the early work broadly in non-PC-based computing. All of the things that we have today that have matured into our game console business, our cell phone business and our Windows CE-based, Windows Embedded and Windows Mobile capabilities all started in the groups I formed here between 1992 and 1998.

I look at the progress we've made there and I take quite a bit of pride in the fact that we anticipated those things and we were able to get into so many of them. The company's strategy all along was to recognize that, ultimately, people would have many smart devices, and we wanted to be the company that would have some cohesive way of dealing with all of them. There's still work to be done, but nobody else has invested to have a position in so many of the devices that are now important to people.

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