Jean-Philippe Courtois, president of Microsoft International, was in SA last week to meet with the software company’s customers and to attend the soccer World Cup final in Johannesburg.

TechCentral editor Duncan McLeod sat down with Courtois, who is responsible for all of Microsoft’s operations outside the US, for an exclusive media interview and asked him about life at the company after the departure of Bill Gates, cloud computing and the plans for its Bing search engine.

What follows is a shortened and edited transcript of the interview.

In what way has Microsoft changed since Gates stepped down?
The biggest transformation of the company ever is the move to cloud (online) computing. I’ve been at the company for 26 years and I’ve seen a few big transformations — when the graphical user interface arrived and when the Internet came along. But I must tell you: the cloud is the biggest-ever change for our company. This is the biggest shift in the industry for the next decade.

We started embracing cloud services more than 10 years ago with our consumer strategy. We now have over 380m Hotmail users and over 500m Windows Live users.

We’ve had to put in infrastructure, huge data centres across the world, and we’ve had to learn to manage all of this.

We have taken all the products in our portfolio into the cloud. The momentum is huge. We have large companies like Coca-Cola with 100 000 users and Nokia with 60 000 users who are online today in the Microsoft cloud and are paid users of Microsoft productivity applications online.

This is the biggest transformation happening in the company. It’s not just about the way we develop software, it’s about the way we sell and market to customers.

Ten years from now will Microsoft still be selling shrink-wrapped software?
Ten years is a very long time.

Well, what is the future of packaged software, which, after all, is Microsoft’s heritage?
Microsoft already provides software in very different ways. We provide software as a package, we provide a lot of software through licensing, which is completely intangible, and for a number of years we have already offered hosted services like Exchange online.

A few years from now, there’ll be fewer physical packages sold. Infrastructure will be broad enough to cover all the countries in the world. This won’t happen tomorrow because there are still emerging countries that are not well served by broadband infrastructure. With software as a service, there will be less need for packaged products, but the shift will take some time.

Will people continue to use PC-based software like Office, or will their computing eventually move online entirely?
Time has shown us again and again that if software is to have a rich user experience, you have to have software on both ends. With Office 2010, you have a great piece of software to do your work offline, but you can also connect to the Web and collaborate, share notes, edit documents, and save all that in the cloud.

With software on the PC, you get to get the highest fidelity and integrity of your Office documents.

Can you give us some colour on the scale of the data centres you have deployed and how much you’ve invested?
We haven’t been precise with those numbers but they are multibillion-dollar investments. We’ve built data centres in North America, Asia and Europe. We have some more work to do to cover Africa.

Do you plan to build data centres in SA and elsewhere in Africa?
It is too early to tell. This is a new market opening up. We are very proactive about educating our customers and working with our partners, system integrators, consulting companies and hosting partners on the benefits of moving to hosted services.

Windows 7 has received a much better reception than its predecessor, Windows Vista. Office 2010 is getting good reviews, your new developer tools are solid, and a potentially very good mobile software platform is coming in Windows Phone Series 7. What happened? Were the problems with Vista a bit of a wake-up call?
You learn from your mistakes. We made some mistakes. Windows is a platform. There are millions of IT companies producing peripherals, software and services. We did not do a good enough job of anticipating the massive changes these companies would have to make.

We’ve reflected on this as a company, and you’re right, consumers and enterprises are incredibly excited about Windows 7. I’ve never seen enterprise customers adopt a new operating system so fast.

In Vista, our agenda was too ambitious. We were trying to resolve many, many different problems with Vista, including, of course, a very big focus on security. To do that, we had to do a big redevelopment of the core operating system. We probably didn’t do a good job of the project management of that and the complexity just got too big.

Now we have someone in charge of the Windows business, Steven Sinofsky, who is a fantastic leader. He was the one leading research and development for Office. He shipped Office on time throughout his career and he’s started doing the same with Windows, delivering a new version every three years. He’s already looking ahead to Windows 8, but it’s too early to talk about that.

Apple recently overtook Microsoft to become the world’s most valuable technology company by market capitalisation. How significant was that event?
Microsoft is a company with US$60bn in revenue. And the size of our profit is the highest in the IT sector and is among the top three of all companies in the world, including oil companies, which tend to make a lot of profit.

Profitability is important, and it’s not just from one product, but our broad business.
The second point is we have some great growth engines. There are some historical businesses that we have revamped. Windows is one of those; Office is another. But we have been building some amazing businesses in the past 10 or 15 years. The enterprise software business is growing in double digits. We sell more software than IBM, Oracle and SAP — that was not the case 10 years ago.

The consumer gaming business was a big challenge for Microsoft when we entered that space. We are now the biggest online gaming community with Xbox Live. We will expand that with Windows Phone Series 7.

Then we have new businesses, the online businesses, where we are in a challenging market with our friends at Google, but we are very determined to innovate with our search engine, Bing. Our market share in the US has climbed from 10% to 13%, which is small, but growing that by 30% is pretty important to us.

Bing has just been launched in the UK, and is coming to Germany and France and a few other countries, too.

Also, we are clearly approaching the mobile market with a brand-new strategy. This is just the beginning of the phone industry. Smartphone penetration will grow and grow.

What plans do you have for an SA version of Bing?
We are making sure Bing as a search engine can work more internationally, especially in English, across many markets. You can expect some big improvements in international markets, including SA, in the future.

What is your ultimate aim with Bing? Do you want to be bigger than Google?
Today, the market is looking for an alternative.

Is it?
Oh, yes. You talk to advertising agencies, media companies, publishers – everybody would like to see more competition in the market. It’s up to us to provide the competitive environment with Bing.

And the ultimate goal is to be bigger than Google?
When you go from 10% to 13% market share, you have a long way to go. Let’s be humble. Let’s grow our share point by point. We’ll take them one by one and grow our share inch by inch. We’ll see how it goes. I think it’s highly beneficial in any sector to have healthy competition. It forces the underdog to out-innovate and it creates better price competition between the players.