Microsoft to SaaS: We (are going to someday) have you surrounded

Microsoft to SaaS: We (are going to someday) have you surrounded

Summary: Microsoft rolled out a few online services for SharePoint and Exchange, got a little SaaS-y and put a little meat on its so-called software plus service strategy. Welcome to the master plan from large software vendors: Turn SaaS (software as a service) into a feature to go with their existing software--or at least join the on-demand software party.

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Microsoft rolled out a few online services for SharePoint and Exchange, got a little SaaS-y and put a little meat on its so-called software plus service strategy. Welcome to the master plan from large software vendors: Turn SaaS (software as a service) into a feature to go with their existing software--or at least join the on-demand software party.

Microsoft's announcement, which does take the software giant more into the on-demand world, is viewed as a disappointment to many pundits. Why? A bunch of folks that jumped the gun with dreams that Microsoft would take Office to the cloud over the weekend.

Mary Jo Foley has the details of Microsoft's latest move into software as a service, but here's the big picture: If you're the software giant the game plan is to turn SaaS and the cloud into a feature. In a nutshell, Microsoft will roll out SaaS features in addition to its existing software when it needs to. What would you do if you made billions off of packaged software? For sheer entertainment value it would be lovely if Microsoft ripped out Office and made it SaaS. Ditto for its other products. However, it would be an extremely bonehead business move today. All Microsoft needs right now is a hedge against SaaS.

And it could be quite a hedge. The Wall Street Journal quotes Coca-Cola Enterprises (CCE)--an independent bottler of Coca-Cola--and  noted that the company plans to switch 20,000 out of 75,000 Exchange users to Microsoft's Online Services. In the CCE example, Microsoft is taking customers from IBM and expanding share.

Perhaps decades from now Microsoft's lukewarm entry into SaaS will look like a mistake, but for now all the software giant has to do its hedge its bets. Why? It can extend into SaaS for folks that want it and go wild when its installed base demands it. There's a double bonus if Microsoft cribs incremental revenue from rivals like in the CCE example. Remember this: All Microsoft has to do is be good enough in SaaS and customers will tag along. That's Microsoft's history.

It's a safe bet that Microsoft's Exchange and SharePoint as a service plans aren't the only game in town this week at its Mix conference (see Dan Farber's preview). Nevertheless, I wouldn't completely shoot down this SharePoint and Exchange as a service announcement as a non-event. The move takes Microsoft into SMB markets where it couldn't go and plays in a space where the company is already a winner. SaaS has infiltrated many markets--CRM and ERP for instance--but mail and collaboration is an open field and it only makes sense that Microsoft defends its turf.

Overall though, Microsoft's move is just another data point in the feature vs. business model debate swirling around SaaS.

Topics: Software, Cloud, Emerging Tech, Microsoft

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4 comments
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  • MS must make it all depend on Windows or Office.

    We are talking Billions, and customer options are very bad for the bottom line.
    DonnieBoy
  • OT: New design

    The Blog Roll does not include the previous 4 Comments. The only way to get to the latest or a prior Comment is through the general title for the author's Comments, which requires a long time to appear on the page.

    Brief bios and topic descriptions can appropriately be found at the bottom of the Comment. Please put back the recent entries.

    I'm complaining here because the introduction to the new format has disappeared from any page I can locate. Sorry.
    Anton Philidor
  • The Future Is About Both Clients And Services

    [i]Perhaps decades from now Microsoft???s lukewarm entry into SaaS will look like a mistake, but for now all the software giant has to do its hedge its bets.[/i]

    I seriously doubt this. Nothing designs things as well as the underlying intelligence in nature; and this intelligence has created all manner of creatures with local intelligences, which are enriched through communication and services. This is why e.g. ants (and just about all creatures) are not analogs to dumb terminals, but rather clients, augmented by communication and services. In fact, as I see it, MS and other companies have a huge amount of work ahead of them, to make devices be ever interactively richer, and ever more intelligent, and to have all of this augmented by services. Will there ever come a day when the software industry will swing back completely to dumb terminals? So long as there is serious competition in the software industry, I doubt it. E.g. if given a choice to see massive amounts of financial data in either text form or via highly interactive, immersive 2D or 3D visualizations, most analysts choose the latter, since this would allow them to make sense of the information many, many times faster, and more pleasantly.

    The computer industry will therefore evolve best, when both the client and back end sides are greatly improved.
    P. Douglas
  • Software plus services

    This isn't surprising in the least, Larry - "Software + Services" has been Microsoft's line since it first started responding to the SaaS hype. The S + S architecture has always been "client + server + services" - so S+S means "we will add services to complement our software products".

    But as you say, doing anything else would be bone-headed at this point.
    neilwd