Jump to content

Microsoft Plays Catch-up lol


Recommended Posts

Microsoft Plays Catch-up

With his new product announcements Tuesday Bill Gates finally admits that software as a service is a big deal. Meanwhile, Salesforce.com's CEO says Microsoft talked about buying his company five years ago.


Friday, November 4, 2005

By David Kirkpatrick





Microsoft has gotten seriously behind. And on Tuesday Bill Gates finally admitted it. In a wide-ranging set of announcements of future products and a group of sometimes-fumbled demonstrations, Gates and his newest lieutenant Ray Ozzie, one of Microsoft's chief technology officers, unveiled an entirely new strategy for software's titan. They promised to deliver a variety of services over the Internet, many for free and supported by advertising. While Microsoft has been taking baby steps in this direction for some time, this is a big leap away from the company's longstanding commitment to software on a customer's desktop that is sold for a license fee. "Every five years or so we look at our strategy and make one of these big bets," said Gates at the San Francisco announcement. He compared it to the company's move from DOS to Windows in the early 1990s, its embrace of the Internet in December 1995, and its launch of the .Net strategy for web services in 2000.


But Microsoft is not really making a bet. It is instead backing belatedly into a set of businesses that are already essentially proven. On the one hand, the move can be taken as an assault on a wide range of companies—including Google, Yahoo, AOL, Salesforce.com, NetSuite, Plaxo, Six Apart, Intuit, Symantec, and even IBM. On the other hand, Microsoft should be worried that those companies are already mostly out in the marketplace with successful products in businesses that it is now targeting. It is following, not leading. This isn't the first time Microsoft has played catch-up, but it may be harder this time.


"Software as a service is something Microsoft wanted to pretend wasn't ever going to happen," says Bruce Richardson, a top analyst with AMR Research. "The problem they have is that customers want it. Now more and more of the Microsoft franchise is being encroached upon, and not by a bunch of pimply kids like it was in the early Internet days, but by a company with a $100 billion market cap." (He was referring, of course, to Google.)


But let's note that this new set of products, under the umbrella labels Windows Live and Office Live, is ambitious. At Live.com Microsoft will be offering free homepages that would be more customizable than anything else out there—if the software works as planned, that is. The idea is that you will be able to simply drag mini-applications called "gadgets" (remind you of anything?) into your Live.com page. Says a Microsoft spokesman: "You want blogs? You want specific search criteria? You want a big clock? You want music? It's a blank sheet of paper that can be whatever the heck you want." That would probably surpass MyYahoo, if it existed. Playing around with the very early beta version online, I couldn't get it to do much of anything. Many of the functions don't yet exist. Delivery dates are vague, but from the sound of it Microsoft hopes to have all this stuff working in 2006.


And there's plenty more ambition: Microsoft says it will include new search, e-mail, instant messaging, and blog tools at Live.com. It plans to offer a service that stores your favorite web addresses online, so you can access them from anywhere, including mobile devices, such as cellphones and PDAs. One part of the service will offer you the opportunity to create a social network out of your contact list, so you can discover friends of friends. As part of Office Live, small businesses will get a free URL, free web hosting, free e-mail, tools to develop a website, and 30 megabytes of storage, all in exchange for displaying ads. (There's much more to the various announcements; details are on Microsoft's press release.)


As virtually all the press coverage noted, the success of Salesforce.com showed Microsoft that it was missing an opportunity. The six-year-old company provides software as a service to customers—both CIOs and ordinary employees—who prefer not to deal with the hassle of maintaining their own software. Salesforce.com now has 17,000 customers, mostly small businesses, and saw its revenues grow 77% in its most recent quarter. Salesforce.com's new AppExchange—a marketplace for web services from a variety of vendors, all built on the company's basic platform—goes well beyond its roots as a provider of software for salespeople. The company slowly is becoming a nexus for enterprise software—period.


After the Microsoft announcement, I spoke to Salesforce.com founder and CEO Marc Benioff. "It's fine to announce something," he says, "but where is their advantage in this situation? They're saying now they'll have advertising in Excel. That's their innovation? Where do they say it will be better or cheaper than everyone else?" Benioff says Microsoft CEO Steve Ballmer visited him in San Francisco in 2000 to discuss buying Salesforce.com, but that Ballmer was dissuaded by others inside Microsoft who believed that software as a service wouldn't allow the company to "pull through" its other products. "Microsoft's whole strategy," says Benioff, "is based on pulling through, starting with Windows and pulling through everything else—Office and all its products for servers." (Microsoft declined to comment on Benioff's remarks.)


Benioff noted that while Microsoft is still nowhere near offering genuine hosted versions of its signature Office applications, others are way ahead of them— http://www.Writely.com has a Word alternative; http://www.Numsum.com looks like Excel; and perhaps most impressively, Goffice is a full suite of business applications available as an online service.


Referring to the whole range of this week's announcements, AMR's Richardson says, "It's imperative Microsoft get this stuff out as fast as possible." Delivering on these ambitious and impressive announcements is Microsoft's next big challenge.





WOW, Free web-based office utilities?!!!







Link to comment
Share on other sites


This topic is now archived and is closed to further replies.

  • Create New...