Microsoft’s plan is to make up for smaller profit margins from web-based applications
Microsoft is making its biggest move into the mobile, Internet
accessible world of cloud computing this week, as it takes the wraps off a revamped
online version of its hugely profitable Office software suite.
The world’s largest software company is heaving its two-decade old set of applications
including Outlook email, Excel spreadsheets and Share Point collaboration tools
into an online format so that customers can use them on a variety of devices from
wherever they can get an Internet connection.
It wants to push back against Google, which has stolen a small but worrying percentage
of its corporate customers with cheaper, web-only alternatives, which remove the
need for companies to spend time on installing software or managing servers. It’s
obvious that Microsoft has to do this if they are going to remain competitive with
Google, said Michael Yoshikami, chief executive of money manager YCMNET Advisors.
It’s something they have to do. Microsoft shares rose 3.7% on Monday 27th June,
the largest gain in a single trading day since September, partly buoyed by hopes
that it can ultimately boost profits by extending its software dominance to the
growing cloud sector.
If they execute effectively and it’s adopted, it could be a game changer, said Yoshikami.
Whether or not that will happen is a whole other story. Microsoft has offered online
versions of some Office programs chiefly Outlook email for it's corporate customers
for several years, and last year rolled out free versions for individual home users
Chief Executive Steve Ballmer is set to present an overhauled and updated set of
offerings collectively called Office 365 at an event in New York City on Tuesday
(28th June) morning, underlining the company's newfound online focus. The market
for web-based software services is heating up, and every company, government department
and local authority is getting pitches from Microsoft and Google whenever they reevaluate
their office software.
It's a new challenge for Microsoft, which built itself up on expensive
versions of software installed on individual computers. That business model turned
the Office unit into Microsoft’s most profitable, earning more than $3 billion alone
last quarter. Microsoft’s plan is to make up for smaller profit margins from web-based
applications - due to the cost of handling data and keeping up servers by grabbing
a larger slice of companies overall technology spending.
Courtesy: Times of India