Microsoft's Big Plans for Hosted Services

By Michelle Savage

August 1, 2008 —  (Page 1 of 4)
Microsoft may be pushing its new Online Services, but that doesn’t mean it wants them to push packaged software out of the picture.

Microsoft unveiled plans for its suite of Web-based services at the company’s Worldwide Partner Conference in July, touting its hybrid strategy of "Software plus Services," which combines on-premise software, partner-hosted software and Microsoft-hosted software. But the company made it clear that this would be a marriage of solutions, not a replacement.

Microsoft Online Services gives customers who use in-house computer systems the option to switch to “cloud computing,” which it said is a “cost-effective” solution for businesses of all sizes. While, in the past, Microsoft has relied on selling software that runs on individual computers and servers, it has invested billion of dollars in massive data centers, which support this new portfolio of Web services.

Now, customers have the option of letting Microsoft run their e-mail, collaboration or sales programs and delivering those applications over the Web for a monthly fee. “Our vision is that everything you can do with our on-site servers, you will be able to do with our online services,” said Stephen Elop, president of the Microsoft Business Division.

Microsoft Online Services delivers software as subscription services to businesses of all sizes hosted by Microsoft and sold with partners. The software includes Exchange Online, Office SharePoint Online, Office Communications Online, Office Live Meeting, and Dynamics CRM Online. Elop said that Microsoft is increasingly seeing customers, partners and even competitors embrace this flexible approach to the cloud.

Why is Microsoft offering this now? Pund-IT Research analyst Charles King believes the release of Online Services is tied to the availability of high-speed Internet access, increased competition and customer demand.

“From a practical standpoint, the infrastructure exists for most companies to be able to deliver and use services like this effectively,” said King. “The concept of application and service provisioning has been around for about a decade but has been heavily constrained by companies’ access to high-speed Internet. In many cases, it required T1 or T2 lines, which are very expensive and cut into the overhead. It just didn’t make sense, especially for smaller companies. Over the last three or four years, high-speed access has become ubiquitous in most areas of the US.”

Related Search Term(s): cloud computing, e-mail, Microsoft

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