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Microsoft seeks next big idea in Cambridge

Creates new unit aimed at innovation

Email|Print|Single Page| Text size + By Robert Weisman
Globe Staff / June 30, 2008

CAMBRIDGE - Microsoft Corp. is reinventing itself, and it's looking to One Memorial Drive for a dose of innovation.

That will be the home of Microsoft's Boston Concept Development Center, a first-of-its-kind research unit that's assembling dozens of engineers and designers and sniffing out technologies with the aim of incubating new Internet businesses within the company.

The center, more than 3,000 miles from Microsoft's headquarters in Redmond, Wash., is part of a bid to recapture the software company's cachet in a new technology era increasingly dominated by competitors such as Google Inc. and Apple Inc.

The stakes are high for Microsoft and the Boston area. Boston software legend Ray Ozzie replaced Bill Gates as Microsoft's chief software architect in 2006. Ozzie has been pushing for a transition from the desktop software that accounts for the bulk of its revenue to the Internet services that are the wave of the future.

Now that Gates has logged out as a full-time employee, and Microsoft's proposed takeover of Yahoo Inc. appears to have collapsed, spawning technology in-house becomes more critical.

If the Boston Concept Development Center can become a wellspring of innovation - in fields ranging from social networking to Internet search - it will spin out new businesses that can grow in the Boston area, where Ozzie, who developed Lotus Notes and still has a home in Cape Ann, spent most of his technology career.

Microsoft already has more than 800 employees in Massachusetts.

"Microsoft is making a big investment in Massachusetts," said Reed Sturtevant, 51, the director of the Boston Concept Development Center, who worked with Ozzie in the 1980s at Lotus Development Corp. and joined Microsoft last fall. He's spent most of his time so far recruiting. "There's a huge amount of talent in Boston," he said, "and the question is, how do you bring new talent into Microsoft?"

Working on cutting-edge research is one draw. While he talked only in general terms about some of the early projects his team is tackling, Sturtevant said one will involve "family ties," adapting social software to help families communicate and interact. The software would run on everything from cellphones to screen savers, and keep track of family members through global positioning satellite technology.

Another will address "e-mail overload," especially organizing and viewing less important messages. The center also will look for ways to improve search and "crowdsourcing," the same technologies that have been driving the growth of Google and Facebook. Applications that connect people, devices, and software will also be a focus.

"The big question is what's going to come out of this, and in what time frame," said Laura DiDio, research fellow for the Yankee Group research firm in Boston. "Microsoft doesn't have time to waste. You've got a very skeptical public right now that's looking to Google or Apple for technology leadership, not Microsoft. This is sort of an effort to return to Microsoft at its roots, when it was young and edgy."

That goal is reflected in the space the team will move into this summer at One Memorial Drive, an office tower looming over the Charles River outside Kendall Square. Construction workers are renovating two floors, connected by a bleacher-style staircase and open work area.

Sturtevant, who worked for the IdeaLabs incubator in the 1990s, served as chief technology officer for social networking startup Eons Inc. before joining Microsoft last fall. He reports to Jack Ozzie, Ray's brother and his general manager for concept development.

"A little bit of distance from headquarters simplifies our lives," Sturtevant conceded. That's especially true at a time when Microsoft is seeking to protect its cash cows, the Windows operating system, and the Office suite of business software, while rolling out "live" Internet services supported by ads and targeted to consumers and small businesses.

The concept development center fills a void between Microsoft Research, which works on long-term basic research, and product development labs aligned with the company's operating businesses, which focus on new features that can be integrated into Microsoft products. Sturtevant's aim will be to test several concepts a year that can be commercialized whether or not they fit into existing products.

So far, Sturtevant has hired more than a dozen software engineers and designers, and is working to expand his core team to about 30 later this year. If the group is successful, Microsoft executives say it could grow much larger in coming years and serve as a model for concept development centers the company could launch elsewhere.

"We'd love to see the development center double in size in the next two to three years," said Rupert T. Bader, director of workforce planning at Microsoft headquarters in Redmond. "We see the Boston site as a magnet for talent from all over the East Coast. And we're going to watch [Reed Sturtevant's] efforts closely to see how effective this is as a seed for other concept development centers we might open."

Sturtevant's team will be part of a larger, already existing Microsoft office at One Memorial Drive, next door to the Massachusetts Institute of Technology, that serves as the company's Boston-area development hub. The office will also house the company's first Microsoft Research lab in the United State outside Redmond and development offices for its SoftGrid virtualization software. Overall, the company is leasing more than 180,000 square feet on five floors in the 17-story building.

"This is a departure for Microsoft," said Giles McNamee, founder and managing director of Boston investment bank McNamee Lawrence & Co., who was briefed on the development center. "In an organization that's gotten as big as Microsoft, this is an attempt to foster entrepreneurial activity and get people excited about the next big thing."

Robert Weisman can be reached at weisman@globe.com.

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