Ray Ozzie addresses the crowd in L.A. this week. (Microsoft photo).

LOS ANGELES -- As the man who took over Bill Gates' job as Microsoft's chief software architect, Ray Ozzie gets to figure out where the company will place its next big technological bets. And he has been putting lots of chips on the table this week.

In an interview at the company's Professional Developers Conference here, Ozzie answered questions about Microsoft's new Windows Azure cloud computing platform, the next version of its flagship Windows PC operating system, and its plans to offer Web-based versions of its widely used Office programs -- all of which were unveiled over the past two days.

Ozzie also discussed how he's different from Gates  -- and showed, with a wry sense of humor, how he's the same. Read on for edited excerpts from the interview.

Q: You described this week as a turning point for Microsoft. Is it accurate to say you think cloud computing will define Microsoft's next era in the same way the PC did the first?

Ozzie: I know that people don't like the term, but I would say software plus services defines Microsoft's future more than just cloud computing itself. As an industry, adding cloud computing to the mix is shifting the industry. Adding devices to the mix is also shifting the industry. But it's a turning point for Microsoft because our apps groups are going from focusing on the PC to focusing on PC-Web-phone. Our server folks are changing from focusing on servers to servers and services. So it's a fairly dramatic thing.

Q: One of the surprises today was the company's plans to offer Microsoft Office functionality in the Web browser. Why did the company wait so long to come out with that?

Ozzie: We did a lot of work to understand where we believe people actually will use the things on the Web, and where things will be used on the PC. We came away from that extremely comfortable with the PC. Everything that we see in terms of real-world usage measurement of any of the competitors' stuff or our stuff leads me to believe the reason people use the Web is when they're sharing and doing things together -- primarily. It's not that they don't like using a hotel kiosk, but the main things they do related to productivity are the sharing-related tasks and smaller composition. When you're doing big composition and editing and stuff, the PC is great.

So, feeling comfortable in our own skin about that, then we basically said, "Well, look, then we want to make sure that the file formats and the content is absolutely richly preserved. That's more important than any specific function that we do. So they architected the whole system such that there was code-sharing between what was done on the Web and what done on the PC, so that I don't have to even know whether you're using the Web or the PC. You don't have to know whether I am, and we can still be working together. So we prioritized the PC-Web scenario, more than just racing to the Web, and that's where we are.

Q: What have you learned personally from watching and experiencing the Windows Vista experience at the company, and how is that affecting the strategic direction even in the cloud computing initiatives?

Ozzie: One simple lesson is, make sure your partners -- who you need to bring this to reality with your customers -- make sure they're in synch with you. Over the last two days, you've seen a lot of stuff that we put the "community technology preview" banner on. And what that really means is, it's not yet ready for prime time. This is the beginning. This is not shipment. And part of that is engaging them as being part of the growth of it toward shipment, so that, by the time we declare it to be a commercial release, people will be ready.

With Vista, we were a little bit more insular during those development processes, or we may have had some false starts where people lost confidence and then wanted to wait until their own common sense said, "Yeah, they're about ready to ship" before they would go do the work necessary for the drivers and whatever. I'm feeling very good about where we are organizationally in terms of having learned from that and adapted. But you have to overlay that, at the same time, with so many other changes that are going on.  The fact that services need to be developed differently than pure software. People are learning that at the same time. The past few years have been very interesting from a cultural shift internally.

Q: When you look at Windows 7, it's an interesting balancing act. You have to make a stable transition for developers. On the other hand you have to do enough to excite users. How will you strike that balance?

Ozzie: It depends on which user you're talking about. Most users, honestly, they buy the OS that's on their PC, and the only reason that they would do otherwise is if somebody told them that they were being foolish. Windows 7 is just innately, if you play with it, a great release. I think the doubters will see -- if there was anything that we had done that they lost their confidence in, we're past that point, and I think that the positive thing that will draw people in, in many cases, is the touch work. I won't go so far as to say it's the next mouse, meaning it will be on everything and you have to use it. But it's not going to be like the Tablet PC, where it was truly niche. I think it will go broader and broader. Because it's such a hot thing in phones now, that will just drive the technology and manufacturing costs down and the PC will benefit, just like we've benefit ted from televisions dropping the cost of LCD.

Q: You're not nearly as blunt as Bill Gates can be, so ...

Ozzie: That's a stupid comment.

[Stunned silence, then laughter.]

Q: Oh, you totally got me. ... Do you see the company's culture changing under your technological leadership?

Ozzie: The culture of every company is really rooted in its founders. It really is. I don't know if any company really shakes it, but certainly for a generation or so, this is Bill and Steve's company [Steve Ballmer, Microsoft's CEO]. I am trying to bring a certain style and certain sensibilities that I have because I'm a different person. I've been closer to the code than Bill was for a longer period of time. I have certain strengths. I am not Bill Gates, but I have other things. I think I have already had some kind of an impact in that realm, particularly in the realm of getting groups to work together and align around shared objectives. All I can say is I enjoy the opportunity to keep trying to do more.

Some of the personality characteristics you were talking about created a culture that was always looking out over your shoulder for those guys who were going to take down the company. I probably wouldn't have been that way, but that's so innate to the company. And having gone through battle after battle after battle, the culture is resilient now to coping with these big new competitors who come in. Right now, people focus on Google. They focused on open source a few years ago.

There will be another one. And there will be another one. And people don't get paralyzed. One of the biggest cultural things that Bill brought to the company is, if you're always watching out for that, you don't get paralyzed when that next thing comes along. You look at it, you assess it. There are some people who are freaked out, and some people who are too calm, and altogether, we move forward. We learn how to take the things that we can control and manage through those, and persevere. This cloud stuff and the Office stuff that you've seen today, it's intentional, well-thought-through business strategy, technology strategy, and we will just keep moving forward, and Bill and Steve are really to credit for that.