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Why Microsoft Won't Dominate The Cloud

by Maroushka Kanywani, Editor, Dashboard InsightThursday, November 27, 2008

By Bill Snyder, InfoWorld

It's no surprise that Microsoft has its eye on the cloud. Cloud computing, that is.

What is surprising is the news -- first unearthed by BusinessWeek reporter Peter Burrows -- that the software giant is planning to build 20 datacenters at a cost of about $1 billion each in hopes of dominating the cloud.

Even in this day of the $700 billion bailout, $20 billion is real money, and there aren't many technology companies with pockets that deep. But Google is in that financial league, and it's clear that the Redmonders are hoping to carpet-bomb the Googleplex. "Google has done a great job of hyping its prowess. But we're neck and neck with them," Debra Chrapaty, Microsoft's vice president for Global Foundation Service, told Burrows.

Neck and neck? I don't think so. Microsoft is the wrong company at the wrong time to dominate the architecture of the future. Here are four big negatives that will keep Microsoft out of the winner's circle.

1. A motivated salesforce. Great technology means nothing unless someone decides to buy it. And when we're talking about enterprise customers, we're also talking about a direct salesforce. In most software companies -- and Microsoft is no exception -- those feet on the street are incentivized (an ugly but useful word) to sell a certain type of product. It can take a long time to find a compensation structure that the salesforce will buy into. Until Microsoft does, they'll keep peddling the same old products in the same old way.

2. Brand equity. Microsoft's brand -- and it's a great one in many respects -- is all about Windows and Office. It's not about the cloud or software as a service. It's no accident that Web-based e-mail, probably the simplest cloud service, is dominated by Google and to a lesser extent Yahoo.

3. Cannibalization. The majority of Microsoft's revenue and profits still comes from Windows and Office. There is no way the company can afford to encourage users to emigrate from Office to a cheaper, Web-based alternative. Sure, Microsoft will roll out a new version of Windows Live that includes Web-based apps, but you can bet they'll be very lightweight. Google, on the other hand, has core business built on the Web that will only be enhanced by its efforts in cloud computing.

What's more, a host of non-Office productivity apps and suites are beginning to make small inroads into the Office monopoly.

4. The desktop culture. Microsoft became a giant because it dominated the desktop, from the operating system to the productivity suite. The company has certainly evolved, but the Vista debacle tells us that the old "build it big" mindset is still firmly in control. Microsoft knows how to build a battleship, but it has yet to understand that speedboats are the craft of the future.

Having said all that, it's also clear that Microsoft isn't, and won't be, on the ropes anytime soon. There are plenty of reasons that most businesses and consumers will stay on the Office treadmill. They've already spent a lot of time and money learning it, and old habits die hard. Then there's the pesky problem of bandwidth. If you're on an airplane, or just out of reach, running an app in the cloud is a no-can-do.

The technology business is not a zero-sum game, nor is it a something out of the pages of Sun Tzu's Art of War where there can only be one victor. There's plenty of room for both Microsoft and Google to make obscene amounts of money. But Microsoft won't make it in the cloud.

I welcome your comments, tips, and suggestions. Reach me at bill.snyder@sbcglobal.net.

Source: InfoWorld

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