Interview: Philippe Courtot

Feature by Paul Fisher

The Qualys CEO firmly believes that the internet has taken over from software - which is why Bill Gates is in trouble.

The Qualys CEO firmly believes that the internet has taken over from software - which is why Bill Gates is in trouble.

Philippe Courtot, without any obvious irony, describes himself as a "child of the internet". Unusual for a chief executive but, as this interview progresses, it becomes clear that the 61-year-old sees himself as a most unusual CEO. He is referring to his time spent at the European Organisation for Nuclear Research, where he witnessed the birth of the web under the aegis of Tim Berners-Lee.

"I really understood, deep down, how it would transform our lives for the better," he says. And his bank balance. Since that time Courtot, a physicist who studied in Paris, has started and sold a number of successful high-tech businesses. But it wasn't until the turn of the century that he began to formulate ideas for a business that would use the internet to deliver its product.

Unfortunately, many of his contacts in the venture-capital (VC) community were rapidly retreating from internet businesses as the bubble spectacularly burst. Nonetheless, he persevered. "They retrenched. Our VC was adamant in trying to push us back into developing enterprise software," Courtot recalls. "I said no. I had to make a big decision - we couldn't find the cash, so I put in my own."

And so Qualys and its embedded appliance and software-as-a-service (SaaS) model was born, but not without some challenges ahead.

"We knew we needed to go inside the company, but customers don't want us inside. So we thought: why don't we make an appliance out of one of our servers in our data centres that are looking at the perimeter as a focus, and then we'll remotely manage it and put these servers into the enterprise," he says.

That was how it started, and the company can point to real success and big names - Courtot claims some 3,000 customers in 85 countries, including almost 25 per cent of the Fortune 1000.

So does Courtot believe that enterprise software should be obsolete? And is that a good thing? "Yes to both, and for a very simple reason: it's not economical anymore to develop, deliver and maintain enterprise software," he replies. "It's been seven years now since we developed this model - everybody said we were crazy. Now, everybody has realised that delivering software in your browser is much more effective, the economies of scales are there."

Of course, there is a highly successful precedent for SaaS outside of the security arena:, whose CEO, Marc Benioff, is famous for declaring the death of software. But Courtot, is less keen to predict such an extreme notion than Benioff.

"That's not really what matters," he insists. "It's not about killing the software industry, it's about providing customers with a fair solution. Everything we do is for the customers, it's not our data, it's theirs." Yet Benioff and Courtot are united in seeing the need for something of a Darwinian clearout among providers. "It's no longer economical for the weak ones to continue developing software", is Courtot's ruthless assessment of the situation.

But what about corporate environments and those CISOs charged with protecting them who are not quite comfortable with the concept? They may feel that they're losing control of what they have at the moment. No problem, according to Courtot.

"I used to say a few years ago that the CIO would become the chief information outsourcer. More and more companies will say: 'Technology is a commodity; we're not in the business anymore to create differentiation by building all these things ourselves. It's essentially about leveraging what exists, and the real value is in what we do with the data, the workflow.'"

Despite his enthusiasm for all matters SaaS, he does accept that there are still some limitations. For example, a fully customisable workflow is one thing, but that is not for Qualys to provide, he says. "I wish there were some tools we could integrate in our platform, that's the missing piece," he admits, slightly contradicting himself.

He's sanguine about any over-reliance on the internet, dismissing my question about fears over any future catastrophe. "There are always risks. The internet, as we all know, was designed to continue if a part of the network is down, or has been destroyed," he insists.

This is not the question, it's a diversion from the real, tangible issues as he sees them. And it's all about money and, with it, the future of the industry. "It costs $82 billion (£41 billion) a year to maintain Microsoft Outlook for 400 million users at present. Google can maintain and provide the same, if not better reliability to 400 million customers at a fraction of the cost. There's a lot of dollars here, which could be invested in something else," he claims.

We are warming up to one of Courtot's favourite themes: the changing of the IT guard. He may not believe in the death of software, but he certainly believes in the demise of Microsoft and the rise and rise of Google. In fact, he is so effusive about Google you'd be forgiven for thinking he works for the company.

He repeats his often-expressed conviction that Vista is the last operating system we will see from Microsoft. Bill Gates, he says, has always been afraid that one day a company would come along and make him obsolete.

"He thought at one time that Netscape would be that company, but Netscape blew it. Then he suddenly saw that Google had become that company. I think he realised about four years ago that there's nothing he could do to stop Google," he claims.

It's curious to hear Courtot on the subject of Gates and Microsoft. Clearly he has the utmost regard for Gates in an almost paternalistic way. He relates other conversations he has had, where Gates confessed to losing the creative spark, the drive and the productivity. "Gates said to me: 'Philippe, I'm my age now'. 'You're still a young kid, look at me,' I replied. And he said: 'But you're not really an architect.' I objected: 'No, I am - I talk to engineers as much as you do, probably even more, and I'm influencing the product direction.'

"Every time I've changed industry I disappeared for a year and a half. That gave me the ability not to be a prisoner of one environment, to assimilate all of what I learned and come back with a fresh eye, ready to start again," Courtot adds.

There's a disingenuous element to all this, of course. No Microsoft means huge opportunities for Qualys and its rivals, and this is leavened by the ruthless streak that so clearly lies within the Courtot business DNA. When he asks: "Who is capable of helping Microsoft make the transformation it needs to make?", you sense he doesn't really want an answer. He knows where he thinks the future lies - those companies now following his lead. "Oh, there's a tsunami out there," he says of the start-ups. "Today the VCs are only investing in three categories: consumer-driven applications, green technology and SaaS. They are not investing in enterprise software. Finished."

But Courtot is far from finished. At an age where most would be thinking of retiring, he is the father of an 11-month old baby girl. He wants to carry on - like Picasso, he says.

"No-one questions Picasso painting until his very last day on earth. That's the way I feel. I think to me, looking at companies, it's forging them, trying to understand a need in the marketplace, trying to make the difference. So, why should I stop? I've got that in me, and that's what I will continue forever."

He still wants to grow Qualys. After that, he says, he may take another sabbatical and then bring the internet to more people. "Whatever I do, I still really want to be in that internet revolution, which I think is just the beginning."

It's obvious there's a lot going on in this man's mind - Picasso, Gates, destiny and history and his place in it - big stuff. One thing he clearly has no time for, despite the rewards his adventures have brought, is indulgence. He says he owns only two suits that serve every occasion and four pairs of shoes. He arrived for our interview by tube.

He talks about his baby daughter. "I think she has some of my genes. She's very curious, she wants to understand things very early on, she's very active.' he boasts. "Deep down I'm a physicist, I still want to understand the fabric of the universe, I still spend a lot of time looking at new discoveries. I've got that drive in me." You'd be unwise not to believe this engaging man-child.


So is Microsoft really doomed as Philippe Courtot claims? It's an intriguing idea, but one not without precedent - once-dominant players such as Wang and Atari were brought down by market and technological changes they didn't see coming.

Even IBM was once thought to be on the brink of destruction thanks to a newly dominant Microsoft. Yet, two decades later IBM has reinvented itself and remains one of the world's great corporations.

But does Microsoft have the same capacity for reinvention? It may be that it has the capacity but no longer the opportunity. Its room for manoeuvre is extremely limited.

It's recent bid for Yahoo smacks of desperation. It would undoubtedly increase Microsoft's share of online advertising revenue, but do little in terms of product innovation. In fact, all that Microsoft would get out of the deal is a more successful version of its own MSN service - which would be difficult to merge with Yahoo.

Most of the business press have focused on the battle for the internet search dollars that Google so efficiently hoovers up right now. But this is only half the story.

Even if the deal goes ahead, it will not address Microsoft's underlying problem: its reliance on enterprise-based software and corporate customers locked into upgrade cycles.

Google and any new players are well placed to capitalise on the shift in computing. Even if Google was to lose some of its search revenue, it has an innovation culture that has already produced a useful set of web-based office tools that run on any device. Microsoft could do the same - but not without cannibalising its own enterprise applications.

Operating systems won't disappear, but those who were tied to Windows will welcome a loosening of the leash. No one has ever loved Microsoft.

There is another worry for the company that Gates will soon be stepping away from. Microsoft used to be the first stop for America's brightest and best, now the Stanford engineers and Harvard MBAs head straight to Google. In tech, more than any other industry, you cannot afford to be seen as second best. If the next generation of technological leaders and innovators are ignoring you, your products, your vision and your ability to adapt to big change will suffer.

Microsoft's battle for survival is about much more than buying ad revenue. It could be that it is now too big and too entrenched with enterprise computing to perform the seismic shift it needs.


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