As the battleground between Microsoft and VMware takes shape with the launch of Microsoft’s Hyper-V, I’ve talked about what VMware should do as well as how Hyper-V could prevail. While this is a critical battle for both companies, it is only a precursor for Microsoft as Google looks to be launching the cannibals of commoditization at Microsoft’s core applications.
This morning a very interesting article on online office applications appeared in Computerworld. While the article by David DeJean is a feature assessment of three online office applications (Google, ThinkFree and Zoho), the strategic implications of these innovations become obvious in the first paragraph:
For quite a while, Web-based suites — which offered word processing, spreadsheets, presentations, and other tools associated with desktop office suites — were extolled not because they did these things well, but because they could do them at all. But the three major competitors, Google Docs, ThinkFree, and Zoho, have all made major improvements in recent months. They’re becoming both broader, with more applications, and deeper, with more features and functionality in existing apps.
This takes me back to a Computerworld blog discussion and Nicholas Carr’s new book The Big Switch. Carr argues in The Big Switch that enterprise IT is about to get sucked into the cloud of utility computing, similar to how electricity production went from strategic industrial age differentiator to ubiquitous commodity as access spread and service providers expanded their coverage.
That switch would be a major disruption to the likes of Microsoft, as the world of massive shrink-wrapped and pre-installed software for ever larger hard drives has been very good to the Redmond Empire. It has allowed Microsoft to bundle its way into waves of innovations while crushing rivals. Its ability to assimilate and crush reminds me of Ancient Rome.
As I mentioned a couple days ago in Microsoft Unleashes the Cannibals, cloud computing gives new entrants the ability to deliver software as a service and change the economics of the software industry. And I think that both Microsoft and Google are well aware of the enablers, the potentials and the new stakes.
I think Microsoft is bracing for the first formidable cannibal assault on its core suite of applications. Yes, Google may do to Microsoft what Hyper-V is attempting to do to VMware and what Microsoft has done to others for decades. The outcome of this assault promises to change the critical requirements of enterprise computing, spur new innovation and make computing more affordable and accessible for even more users.
Clearly Microsoft is a well-funded empire populated with a lineage of brilliant strategists/generals. It won’t go away. But I think it will have to adapt to the switch as Carr calls it; and the way it fights off cannibalization will impact Microsoft, the software industry and the world of computing.
With software from the clouds will come new demands, new players and new opportunities. Appliances that enhance security in the clouds, make compliance more manageable and enhance flexibility and control will become even more strategic. Specialized hardware and ASIC races between various “one trick pony” category players will become increasingly uncommon. Service providers will ultimately out-innovate many enterprise data center teams.
I think this process is already underway, as some enterprises have already started commoditizing their shops, outsourcing certain roles, and establishing ever more bureaucratic technology evaluation committees. Security pundit Chris Hoff may blame analysts for quashing innovation, but I think enterprise IT is under even more scrutiny for justifying innovation.
Google’s cannibals will also likely impact more than Microsoft. They may transform the increasingly reactive and incrementalist IT industry already juggling legacy purchases with emerging new demands under increasing resource constraints. They may force change at a critical time for the IT industry.
The shift to cloud computing could unleash an explosion of innovations in applications, application delivery, core network services, traffic management and security. It promises a new generation of technology leaders, opportunities and market dynamics and perhaps even new types of service providers. No doubt Microsoft will survive and ultimately thrive; the real question is what its business will look like after the aftermath of its coming battle.
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