Microsoft COO: Asia's SMBs to drive growth

Region's small and midsize businesses key demographic for Redmond's growth, Kevin Turner says, adding software giant will win them over with new cloud services and subscription models.

Microsoft is planning to offer more customized subscriptions plans and cloud computing services to attract small and midsize businesses, as it looks to this market segment to grow its Asia business.

Redmond's COO Kevin Turner acknowledged that while Asia is a diverse region and home to a large proportion of the world's population--making it hard to speak of market trends generally--many markets in the region are developing "really quickly". The growth, he added, is driven mainly by SMBs.

The executive, second only to CEO Steve Ballmer in Microsoft's leadership chain, was in Singapore earlier this week to announce Microsoft's Office 365 partnership with local telco StarHub. The tie-up will avail the cloud-based productivity suite to StarHub's commercial base, which includes 1,000 SMB customers.

In an e-mail interview coinciding with his visit, Turner shared with ZDNet Asia his observations on the region and discussed the development of the software industry, as well as the impact of cloud computing and mobility on Redmond's core businesses.

Q: What's your take on how the software industry is developing and where the growth opportunities are?
Turner: If you stand back and look at the pace of innovation driven by cloud computing, mobility and natural user interfaces, it's astounding.

Microsoft has been investing in this future and we're in a good position to deliver experiences at the intersection of these new developments. You will continue to see our innovation across a number of areas such as Windows operating system (OS), Windows Phone 7, Office 365 and Xbox.

Cloud computing and mobility has certainly impacted Microsoft's core businesses such as its Windows and Office offerings. Could you elaborate on what it is doing to adapt to the changing landscape?
We've moved into an era of always connected, Internet-centric computing, and our vision has, in turn, evolved from being on every desktop to being on every platform.

With this change in vision, Microsoft decided to invest heavily in both cloud computing and mobile technology. As Ballmer said, "We've bet the company on the cloud", and you can see this bet paying off for us across our offerings today.

Internally, we have 90 percent of our engineers working solely on cloud initiatives, but it's in the convergence of all the platforms where you will see our real value. Look at our Xbox Live, Office 365, Windows Live or the cloud integration built into our Windows Phone 7 mobile OS--we've made great strides in bringing together cloud computing with mobility through these offerings, and you're going to see us continue to compete in these areas.

Let's talk about Office 365 specifically. Initial reception to the product was overwhelming, with the private beta offering being oversubscribed very quickly. What's the overall roadmap for the suite?
You're right that our initial private beta offering was oversubscribed in less than 24 hours, which is why we're happy to begin a public beta this week for customers and are aiming for the global launch later this year. Looking further, Office 365 will expand to include Microsoft Dynamics CRM Online next year.

Within Asia-Pacific, the response has been great so far. But don't take my word for it! Joe Sweeney, an analyst at Intelligent Business Research Services (IBRS), for one, said, "Office 365 represents the biggest change in Microsoft since the departure of Bill Gates", so he seems pretty excited.

How about Microsoft's Business Productivity Office Suite (BPOS)? Will this create fuzziness in terms of branding for Office 365?
BPOS is no more! We're going to bin the product and focus on Office 365. Thank God, too, because I love Office 365.

Additionally, while the new suite may be a new brand, I wouldn't call it fuzzy. Office is a globally known brand--one that people trust, are familiar with and rely on every day. I would argue that Office is much more recognizable than BPOS and, keeping in mind that this week marks the start of the public beta with the global launch later this year, we expect to see greater awareness for Office 365.

With regard to product and maintenance pricing, what's Microsoft doing to better serve existing and potential customers in an increasingly consumer-driven, app-filled IT environment?
People and organizations are not all alike--they come in all shapes and size and need solutions that meet their unique needs. What we have, though, is our engineering strength and, with this, we can produce offerings to better serve our customers.

Take Office 365 for example. We've updated our volume licensing to allow customers to pay per user and not per desktop, and that's a big deal for our customers. This is going to help us reach the base of the pyramid of SMBs, which is hugely important for Asia as this demographic is driving the growth we are seeing in the region.

We're also seeing that service level agreements (SLAs) for cloud computing are also vital to enterprises. Customers continue to choose Microsoft's cloud applications over our competition because we deliver enterprise-grade capabilities, flexibility and value backed by the industry's most rigorous financially-backed SLA that businesses and governments demand.

That said, licensing and SLAs are nothing without technology. We've invested heavily in cloud computing and these investments are going to produce results over the long term.

Lastly, what role will Asia-Pacific play in advancing Microsoft's cloud and mobility strategies?
There are many markets in this region that are developing really quickly and, like I said earlier, SMBs are driving a lot of this growth. And many of these companies are doing so using cloud services to leapfrog legacy technologies and compete with larger, more global organizations from other markets.

I think this is a really exciting development, and with products like Office 365, we are in a great position to help customers and partners with their journey to the cloud. As an illustration, our partner program for BPOS in Asia grew 300 percent year-on-year between 2009 and 2010 and is now five times the size of Salesforce.com's entire global partner ecosystem. We've also added customers like Coca-Cola Amatil in Australia and Singapore Airport Terminal Services (SATS) to our portfolio.

People here are realizing the potential for cloud computing and it's something we're really excited about.

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