Microsoft (yes, Microsoft) has a far-out vision

Last June, in the basement of the Microsoft visitor centre in Redmond, Washington, Todd Holmdahl, a Microsoft hardware guru, and others nervously walked Satya Nadella, the new chief executive, through a demonstration of a secret project.

More than a hundred people had toiled for several years on the ambitious effort, which would eventually be called HoloLens. At the time, the HoloLens headset was a clunky web of straps, wires and electronics. But it was able to project images onto lenses in front of people’s eyes, adding virtual landscapes and objects on top of the view of the natural world.

“Nadella said right away, 'This is something that we’re going to do,'” Holmdahl said. “We are going to create a new product category, and this is the type of thing that Microsoft should be working on.”

That response says a lot about the reshaped Microsoft that Nadella envisions - one with fewer internal fiefs and with more willingness to favour big bets on new technologies over protecting legacy cash cows. Part of that rebuilding occurred at a Microsoft conference that started Wednesday last in San Francisco, where he sought to mend Microsoft’s frayed relationship with software developers, making it easier for them to convert apps written for Apple and Google’s mobile operating systems to run on Windows.

He has taken up an effort started under Ballmer to end the factional strife inside Microsoft, making the 1,18,000-strong workforce nimbler. He has rallied them around mantras, like making personal computing more personal through wearables and other devices. At the meeting about HoloLens, Nadella told the team how he wanted the project to proceed.

That meant collaborating with people developing Skype, the company’s online voice and videoconferencing service, as well as the Windows and video games teams. The HoloLens group had already started moving in this direction even before the meeting with Nadella, but his orders galvanised them. Microsoft says HoloLens will go on sale “in the time frame” when Windows 10, its new operating system, is released this summer.

In other words, the HoloLens is only a crucible for the new borderless Microsoft that Nadella is seeking to create. No pressure. There is a short list of big technology companies that have staged comebacks that restored them to their former glory. Arguably, that list contains just one name: Apple.

A big part of Microsoft’s fate rests with its research arm, the quasi-academic group responsible for conjuring breakthroughs that will keep Microsoft relevant for generations to come. On Monday last, Harry Shum, the Microsoft executive vice president who oversees the research operation, was bursting with pride while demonstrating Skype Translator, a new product that incorporates years of work by researchers to convert voice conversations from one language to another in real time.

Shum gamely agreed to conduct a portion of an interview using Skype Translator. Shum sat in his office, and I sat in a conference room down the hall looking at Shum’s face on a computer screen. I asked questions in English, and Shum responded in Mandarin, his native tongue. He answered a question in Mandarin about the impact he says Skype Translator can have, and the software spit out an English transcript and synthesised recording seconds later.

The software made mistakes - Skype transcribed his name as “Hairy” - but it got the point across. “Today we have a lot of obstacles of communication,” Shum said, according to the Skype translation. “Because we speak a different language, you speak English, I speak Chinese, if we are not able to understand the two sides, the world would have a lot of problems.”

Nadella is trying to avoid missed opportunities. He has pushed researchers and product engineers to work closer than ever before. He invited Shum to attend a regular Wednesday-afternoon meeting of a small group called the product leadership team; Shum is the first representative from Microsoft Research to participate in the sessions.

Inside the old Microsoft, the translation technology could easily have languished as a cool demo and nothing more. Product groups would have been slow to embrace an experimental technology that could introduce new costs not to mention uncertainty into their release schedules. Shum, who worked for years as a top engineer on Bing, a distant No 2 in the search engine market to Google, has seen Microsoft get burned in new technology markets before.

HoloLens, too, is jammed with technologies that started in Microsoft Research, including the display technology used to paint virtual images on lenses in front of people’s eyes. It uses cameras developed by Microsoft researchers and first used in Kinect, an Xbox accessory, to map a person’s surroundings so virtual objects stay where they’re supposed to.

Slick hardware, though, will go only so far. If HoloLens has any chance of becoming a breakout hit, it will need must-have applications - add-ons that will do for augmented reality what wildly popular services like Instagram and Snapchat have done for smartphones.
At the Microsoft conference in San Francisco on Wednesday, the company showed examples of how HoloLens will be used. In one, a medical school expects to adopt HoloLens to let students learn anatomy.

In another, a building developer plans to have clients explore finished architecture while on a project still in construction. Those examples fill nice niches, but they certainly don’t scream mass market. For that, Microsoft is turning partly to games.

Minecraft on HoloLens

In September, Microsoft paid $2.5 billion for “Minecraft,” the video game played by tens of millions of people. By January, the logic behind the purchase started to become a little clearer when the company showed the game on HoloLens.

In “Minecraft,” players can build and destroy structures, sort of like playing virtual Legos. With the HoloLens, the game is no longer confined to a smartphone or a computer screen, though. Players wearing the headset can decorate the surfaces of a room with “Minecraft” blocks, then destroy them, if they like.

In the demonstration Microsoft showed, it was possible to build on a coffee table, then crush it to expose a cave below. Nadella said HoloLens was a big reason for buying “Minecraft.”

“Let’s have a game that, in fact, will fundamentally help us change new categories,” Nadella said. “HoloLens was very much in the works then, and we knew it.”

At least one thing is certain: Microsoft will have a lot of competition. Magic Leap, a closely watched startup that Google has invested in, is developing an augmented-reality device. Virtual-reality headsets from Oculus, owned by Facebook, Valve and Sony, which envelop users with virtual environments, are also on the way.

There is also little evidence so far that the public is clamouring to don a headpiece and wear it for hours. Google Glass is a cautionary tale. The company has pulled back significantly on its aspirations for that computer-in-your-face product, as least for now.

Doubters have already lined up with HoloLens, certain that Microsoft will once again trip over itself. The product looks as if it will be far more expensive than smartphones, which benefit from subsidies from wireless carriers that lower their initial cost. One current Microsoft executive said HoloLens would cost significantly more than a game console, which runs more than $400.

With HoloLens, Microsoft appears to be skating to where the puck could be headed in technology, rather than where it has been. Brad Silverberg, a venture capitalist in Seattle and a former senior executive at Microsoft, said he was encouraged that the company was doing that rather than playing catch-up in smartphones.