The blogosphere is alive with Microsoft's patent (link) for pay-as-you-go hardware services. There are a number of patents being filed and awarded and Microsoft has its fair share. What makes this different? I have two thoughts on this event relevance and the innovation process.

Relevance - Microsoft is a software ecosystem company (Cusamano of MIT calls it a platform company - which I feel is a narrow definition). Microsoft has built a formidable partner network that it depends on. So this patent appears to be more of a message to their partners (and the market) that the entire ecosystem needs to be renewed to take part in the software-as-a-service (SaaS) wave. It is interesting, that hardware vendors that are factored into the SaaS equation., as hardware players are often times ignored when discussing the SaaS wave. Could this spark a wave of more cloud-infrastructure providers? and not just the likes of Amazon and Google? Providers who would be enticed to provide SaaS platforms like Azure which was launched earlier this year. I recall Microsoft attempting a pay-as-you-go subscription model for its enterprise software sometime in 2002-2003. The model and the billing engine was in place but not rolled out. I guess CIOs were not quite ready to budget for software as a billed service - it was just too unpredictable. But, maybe now that PUPM ("per user per month") is commonplace, CIOs maybe more willing to discuss this. It will be interesting to see how Green IT, the economic downturn and other events and marketing hype shape this developement.

Innovation process - Microsoft has been a great follower and superb software business operator but not often considered as an innovator. I do not wish to debate what constitutes innovation and what does not, however I believe that innovation in product companies (eg Apple) is different from platform companies (Cisco) and is different from ecosystem companies (Microsoft). And that Microsoft is not doing enough to innovate. However, what is interesting about this patent is that Microsoft filed for patent in June 2007, and would have probably have been working on it for at least a year before that - and must have battled for at least a few months before that to secure funding. So we are talking about an "idea to patent" cycle of 2-3 years. And the hard part is still to come - to make the idea viable and pay off! There are many questions that need to be answered like how to secure intellectual property rights, how to fund open innovation, how to capitalise on investments in research and my favourite - how do we calibrate or overhaul our education system so that we can think and act "glocal".

The next year is going to show us many examples of innovations in the SaaS space. I believe this will drive service-based businesses to greater heights. Programming the web is getting real. And consumer/citizen-centered design will be the dominant way to create services.

Happy new year!