Rumor: Microsoft about to unveil web-apps strategy
Put your ears to the ground, my friends, for the Beast of Redmond may be stirring. I've heard that Microsoft has begun briefing its large enterprise clients on an expansive and detailed strategy for moving its software business into the cloud.
Context & Ripple Effects
The question of whether Microsoft would take Office to the browser has been open since at least October 2005, when ZDNet asked whether it was building a fully Web-based version of Office, and by mid-2007 CNET was reporting that Microsoft's 'Cloud OS' had taken recognizable shape internally. What is new in this report from Nicholas Carr's Rough Type — picked up the same day by TechCrunch, which framed it explicitly as Microsoft trying to escape Clayton Christensen's innovator's dilemma — is the audience: large enterprise customers are reportedly being briefed now, before any public unveiling.
First-order effects
- If the briefings are real, Microsoft's largest enterprise accounts hear the cloud-software pitch directly from Redmond first, meaning the eventual public strategy lands with pre-sold buyers rather than cold.
- The rumor itself pressures Google's hosted-apps push, since every enterprise conversation Microsoft opens about web-delivered software is also a conversation where Google Docs gets evaluated as the alternative.
Second-order effects
- A credible move of Office into the cloud forces Microsoft to manage cannibalization of its most profitable licensed-product revenue — exactly the self-disruption TechCrunch's innovator's-dilemma framing describes — while resellers and partners built on boxed-license economics face a model they did not choose.
- Competitors in hosted productivity would have to respond on price and integration rather than novelty, because Microsoft entering legitimizes the category for conservative IT buyers who were waiting for it to be safe.
Third-order effects
- If the pattern holds, business software shifts from perpetual licenses sold through channels toward subscription services sold by the vendor, changing who owns the customer relationship and how revenue is recognized.
- The move fits the openness posture Microsoft announced publicly on February 21, 2008 — new interoperability principles plus an expanded SkyDrive — suggesting a broader repositioning around services and interconnection rather than a single product launch.
The trend: Enterprise software is migrating from packaged licenses toward vendor-operated cloud services, with incumbent giants like Microsoft timing the transition against the risk of eating their own installed base.