In an extraordinary first, Dave Winer (pictured) - best known as editor of Scripting News, the weblog he started in 1997 and for pioneering several Internet standards in distributed computing, including SOAP, XML-RPC, RSS, OPML and podcasting - has obtained what he claims are 100% authentic copies of internal memos sent out recently to Microsoft staffers by Bill Gates and Ray Ozzie. And he has published both in full at his site.

The purported memo dates from October 30 and is addressed to Microsoft's "Executive Staff and Direct Reports; Distinguished Engineers." Its subject line: "Internet Software Services"

Gates notes in opening that he wrote a memo a decade ago entitled "The Internet Tidal Wave" which described how the internet was going to forever change the landscape of computing, and then 5 years ago the company "focused [its] strategy on .NET making a huge bet on XML and Web services."

Microsoft was a leader in driving these standards and building them into its products, Gates writes, adding the claim that "over 92% of the Fortune 100 are utilizing .NET and our current wave of products have XML and Web services at their core and are gaining share because of the bold bet we made back in the year 2000."

Gates then outlines Microsoft's next big bet: the shift to a services model. He writes:

"In many ways this is not completely new. All the way back in 1998 we had a company meeting where we outlined a vision in which software would become more of a service over time. We've been making investments since then -- for example, the Watson service we have built into Windows and Office allows us and our partners to understand where our users are running into problems and lets us improve their experience. Our On-line help work gives us constant feedback about what topics are helping our users and which we need to change. Products from MSN like Messenger and Hotmail are updated with new features many times throughout the year, allowing them to deliver innovations rapidly. Our Mappoint service was a pioneer in letting corporations connect up to a web based API on a subscription basis."

Microsoft needs to do far more than this though, according to Gates, if market leadership is what it is seeking. Once again - see yesterday's SYS-CON story on this - he cited advertising as Microsoft Priority #1.

"Advertising has emerged as a powerful new means by which to directly and indirectly fund the creation and delivery of software and services along with subscriptions and license fees. ... We will build our strategies around Internet services and we will provide a broad set of service APIs and use them in all of our key applications."

Gates ends his memo by telling everyone in the company that while the "services wave" will be very disruptive, Microsoft has a clear opportunity to lead. "But in order to execute on this opportunity," he writes, "we must act quickly and decisively." But he then strikes a ruminative note, at odds with his earlier call to action:

"We must reflect upon what and for whom we are building, how best to deliver new functionality given the internet services model, what kind of a platform in this new context might enable partners to build great profitable businesses, and how our applications might be reshaped to create service-enabled experiences uniquely compelling to both users and businesses alike."

Tasking Ray Ozzie with leading Microsoft's services strategy across all three divisions was the first sign that Bill Gates believes that the company's services challenges and opportunities will impact most everything it does.

"Ray has long demonstrated his passion for software, and through his work at Groove he also came to realize the transformative potential for combining software and services," Gates observes.

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