Google opened our eyes, says Microsoft's Ozzie

Microsoft chief software architect Ray Ozzie doesn't necessarily think Google has all the answers but he does credit the company with opening Microsoft's eyes.

Speaking to analysts at a Goldman Sachs investor conference in Las Vegas, Ozzie said: "Google's success very clearly caused an inflection point within our industry and within Microsoft in terms of understanding advertising as an economic engine. It was a wake-up call within Microsoft."

Despite pouring resources into its MSN and Windows Live efforts, Microsoft has struggled to compete broadly in the Web search space against Google. Ozzie said the company is still working hard there but is also putting some of its energy into more vertical types of search, which is industry- or topic-specific search. He pointed to this week's acquisition of Medstory, a California-based company that develops healthcare search technology.

Ozzie said Medstory's technology is first being added to MSN Health but will ultimately be included within Redmond's broader Live search engine.

Vertical search pages are just one of the possibilities, Ozzie said, adding that advertisers are happy to look beyond Google if there are simple and effective ways of doing so. "Advertisers, they just want to reach their audiences," he said.

Beyond advertising, the second major influence of Google on Microsoft has been to point to the importance of being able to offer software-based services, he noted. Ozzie made several references to work Microsoft is doing behind the scenes to build a companywide services engine. All of its business units will be able to tap into the engine to add services components to their products, and those tools will eventually be available outside Redmond as well.

He said: "We've been building that services platform. The economies of scale that we gain internally are going to be available to third-party developers and enterprises."

Ina Fried writes for CNET News.com