) to rethink the way it develops software. Seattle Bureau Chief Jay Greene interviewed Kevin Johnson, co-president of Microsoft's platform and services division, which makes Windows, and Jeff Raikes, president of Microsoft's business division, which is responsible for Office.Kevin, for most companies, Windows XP works just fine. Why rush out and buy new PCs with Vista on them?JOHNSON: The investments we've made in Windows Vista and the 2007 Office System and Exchange [e-mail software] are all about unleashing the next wave of productivity. Customers in the last several years have probably done more cost containment coming off the Y2K investment, coming off the dot-com bubble. There was an overinvestment in technology, so they've been very focused on reducing the cost of owning and operating. Now, cost containment is still important, but a lot more priority is being put on driving top-line revenue. There are massive amounts of data in corporate databases on people's PCs. The more you could turn that data into meaningful information, the more you connect people with colleagues and co-workers, you're going to unlock another wave of productivity.The gap between Windows releases was five years. What are you doing to ensure that won't happen again?JOHNSON: There's a set of things that we've done with the engineering system so that we can have a more agile process. And there are certain things that we're doing in the product itself, ensuring that we have better line of sight of the different components and how they relate to one another.Is one of the core lessons that with Windows, you need to think smaller?JOHNSON: One of the values in our company is really taking on big, bold challenges. And I think that's an important attribute for us to retain. The key is how we execute--if you try and jam all of those big, bold aspirations into the next releases vs. taking a multi-release type of perspective.In the Web 2.0 world where everything seems to be moving online, it almost seems anachronistic to be talking about packaged software.RAIKES: The new world of computing is the combination of software and services, and Microsoft is very, very focused on that services opportunity. I think the point that some of the competition misses is they think of it as an either/or situation when in reality it's an "and" situation--it's software and services, and you use the combination to do the best job for the customer.But doesn't the growing importance of the Web and all sorts of devices require Microsoft to take a different approach?RAIKES: You might think the core of our business is the PC. That's the misconception. The core of our business is software. And the software can be applied to the PC, the software can be applied to the server. When K.J. [Johnson] was joining the company [14 years ago], servers were kind of just getting started for us. Now we're big in game consoles. Did we want to get into Xbox because we wanted to be a hardware company? No, Xbox is a vehicle that allows us to deliver software. Zune is about software. So we are about software, and if you stick to that understanding of our company, then it's a lot easier to see how we transform.