A recent Computerworld blog by Preston Gralla exposes a Microsoft weakness when it comes to competing with Google and others in cloud computing:
It’s understandable that Microsoft is leery of offering Microsoft Office as a hosted service, because it could cannibalize its substantial Office revenue. But if Microsoft doesn’t do the cannibalizing, someone else will, especially Google. Unless Microsoft eventually offers Office as a hosted service, it’s facing trouble.
Preston Gralla- Computerworld Blog July 9 2008
Microsoft’s strength when it comes to software as a service is its incredible installed base and brand recognition. Yet delivering Office (for example) as a service introduces substantial business risks, from revenue to distribution and the incredible hold it has on pre-loaded software and shelf space.
Virtualization is similarly a double-edged sword for Microsoft as it brings out Hyper-V to cannibalize the hypervisor and position it as a low-priced extension of its line. Microsoft cannot do the same thing with software as a service, as that would result in a dramatic drain in market cap.
As the spread of virtualization decouples OS and apps from hardware it similarly undermines Microsoft core strengths. That’s why I suspect that Microsoft may be undermining the hypervisor (as a commodity extension of Microsoft) in order to slow VMware and the march of virtualization.
Then along comes Google, delivering applications as an extension of their core business, cannibalizing Microsoft as Microsoft tries to cannibalize VMware’s ESX and the dramatic growth of virtualization. Cloud computing enabled by virtualization is a serious threat to Microsoft. Hyper-V could be merely a faint-hearted attempt to delay the multipronged, multimedia onslaught by Google, VMware, Apple, Amazon, and a growing list of once upstarts now squeezing Microsoft into a box.
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