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Entering a Post-Software World—Microsoft Finally Embraces Cloud Computing
Posted On November 6, 2008
Change has had a big week. We have witnessed a presidential election in which both campaigns leveraged web services to organize their massive, distributed organizations. The candidate that did a better job understanding the new technologies and making people more productive won. Coincidence? The power of productivity of cloud computing has not been lost on Microsoft, and last week, it reacted. The software giant of the previous generation has announced that it is embracing cloud computing with two major announcements—the Azure Services Platform and the ability to use Microsoft Office online. Both announcements are important because producing one without the other would show that the company lacked sincerity.

The first announcement was for the Azure Services Platform, which will help developers create Windows applications in the "cloud" or on Microsoft hosted servers. Developers have long been Microsoft’s secret to success for the last quarter century. However, Microsoft has seen a steady stream of developers (and importantly, young developers) migrate to Amazon’s Web Services, Google’s App Engine, the Facebook Platform, and Salesforce’s However, Microsoft’s developer army dwarfs the number of developers creating applications in these platforms, and creating Azure shows that Microsoft understands the direction of the world.

Even Ray Ozzie, Microsoft’s chief software architect and software visionary who developed Lotus Notes and Groove Networks, says, "Today we’re delivering a game-changing set of technologies that bring new opportunities to the global community of developers. In many ways it’s a turning point for Microsoft. But every time there’s been a major platform shift in our industry, it’s meant new opportunity and growth."

While this important announcement could have been seen as a "me too" move to competing services, the day after the announcement, Microsoft showed that it is putting its money where its mouth is by announcing a forthcoming version of Microsoft Office online. Microsoft made announcements for its two greatest assets, developers and customers, to show that it has officially entered the race to see which company will dominate the next paradigm in computing.

According to Chris Capossela, senior vice president of Microsoft Business, "We are deeply committed to offering our customers the technology they need to succeed. To that end, we’re investing in software plus services for the long term, something that sets us apart from our competitors. Office Web applications complement the Office suite and Office Mobile applications and enable our customers to share and collaborate more effectively through the familiar Office experience."

Software Plus Services

The key phrase that flows in both of these important announcements is "software plus services." As Microsoft owns 90% of the PC and business software market, the company’s transition to this new world cannot cannibalize its business model of customers purchasing Windows and Office. Capossela says, "We are on a path to deliver all our technology as ‘software plus services,’ and today is an important milestone in this journey."

Microsoft will deliver Office applications to consumers through Office Live that will have both ad-funded and subscription offerings. For businesses, Microsoft will offer Office as a hosted subscription service and through existing volume licensing agreements. Organizations can sign up for Office Live Workspace at

To Microsoft detractors, this may show that it is not fully committed to embracing the 100% web world. To Microsoft competitors, this shows that Microsoft is committed to cloud computing and that the space is now legitimate. Microsoft also brings a business model, which is something that eludes many other vendors providing cloud-based development environments.

Time for Change!

While most Americans have heard the word change far too often in the last year as a result of the presidential election, this announcement is just like the recent election. The result is what is important. Today is not the day to worry about which platform or which web-based program your organization is going to use to create documents and share information.

What is important is that every major player in the industry has embraced the concept of developing and providing applications in the cloud. Why? Presently, almost three-quarters of information technology (IT) budgets go to maintaining existing applications and infrastructure. Put simply, most of your money goes into buying the computers, fixing bugs, upgrading software, and answering support questions, i.e., "keeping the lights on."

Soon, every organization within every industry will have to reverse the proportion of maintenance versus new applications or else they will no longer be competitive in their marketplace. The productivity gains made by devoting three-quarters of an IT budget to developing new applications as opposed to simply "keeping the lights on" will be too large of a competitive advantage for those who don’t understand the new world.

To put things in perspective, Microsoft is saying that it is shifting its business from a software company to a web services company. This means that when you get your next version of Windows, you will not have to purchase a new PC to run it in order to answer your email or create a Word document.

For organizations such as libraries and government agencies that are still operating on old versions of Windows and slow computers and still downloading painful upgrades, the future is bright. Upgrading to new versions of software will not consume half of your IT staff’s time and budget.

If Microsoft, Oracle, Google, Amazon, and Salesforce are all on this path, how long until everyone else follows? Not long.

Erik Arnold is a consultant for Adhere Solutions, Inc., a company that specializes in helping organizations leverage new technologies to maximize efficiency and revenue.

Email Erik Arnold

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Comments Add A Comment
Posted By Scott Sheidlower3/7/2009 9:40:47 AM

How interesting,

You didn't notice that not only does Mac have cloud technology but unlike Microsoft, which doesn't run Mac technologies, Apple products run Microsoft technologies! A better buy for my money.

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