Dave Winer has posted copies of recent memos from Bill Gates and Ray Ozzie that are the clearest statement yet about the direction Microsoft will take in competing in a new world of software-as-services. The memos are quite long (Scoble says they are the longest he's seen since he joined the company) and detailed.

Gates writes, "This coming "services wave" will be very disruptive. We have competitors who will seize on these approaches and challenge us – still, the opportunity for us to lead is very clear. More than any other company, we have the vision, assets, experience, and aspirations to deliver experiences and solutions across the entire range of digital workstyle & digital lifestyle scenarios, and to do so at scale, reaching users, developers and businesses across all markets.

But in order to execute on this opportunity, as we've done before we must act quickly and decisively. This next generation of the internet is being shaped by its "grassroots" adoption and popularization model, and the cost-effective "seamless experiences" delivered through the intentional fusion of services, software and sometimes hardware. 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."

Ozzie's memo, titled "The Internet ServicesDisruption" and dated 10/28/05 is framed in the context of the history he has been both a wtness and a catlyst in creating. His tone is reminiscent of Gates' earlier "turn the ship" manifestos when he writes, "Most challenging and promising to our business, though, is that a new business model has emerged in the form of advertising-supported services and software.  This model has the potential to fundamentally impact how we and other developers build, deliver, and monetize innovations.  No one yet knows what kind of software and in which markets this model will be embraced, and there is tremendous revenue potential in those where it ultimately is.

Just as in the past, we must reflect upon what's going on around us, and reflect upon our strengths, weaknesses and industry leadership responsibilities, and respond.  As much as ever, it's clear that if we fail to do so, our business as we know it is at risk.  We must respond quickly and decisively."

Ozzie identifies three emerging trends that are driving this next "sea change":

1. The power of the advertising supported economic model.

2. The effectiveness of a new delivery and adoption model.

3. The demand for compelling, integrated user experiences that "just work".

The future success of Microsoft, he predicts, is predicated on delivering what he calls "seamless experiences" and he provides a lengthy list of what these experiences might (and should) include.

These are powerful documents containing big, bold, and unsettling statements. More than a few cages and empires-under-construction will be rattled by these memos. The winds of change are blowing in the Pacific Northwest and I suspect it will not be long before they are felt across the world.