Microsoft finally clears throat about services

Microsoft has been promoting a combination of 'software plus services' as a way to ease itself away from its packaged-software legacy and into the Web 2.0 future. But nobody seems to sit up and take notice.

The deadline Microsoft gave Yahoo for making a deal or facing a proxy fight came and went this weekend without a word from either party. But even if Microsoft doesn't succeed now in its bid for Yahoo, the company made clear last week, both in private meetings with reporters and in public comments, that it's determined - come hell or high water - to move forward with its services strategy.

In the thick of its battle for Yahoo, some Microsoft executives made time to host reporters at the Redmond campus, and provided a snapshot of the company's strategy. A common thread woven through many of the meetings, which included discussions about Microsoft's evolving development platform, Windows Server, virtualisation and security, was Microsoft's "software plus services" strategy.

Software plus services is Microsoft's twist on the strategy more commonly known as software-as-a-service (SaaS). The company has been promoting a combination of software plus services as a way to ease itself away from its packaged-software legacy and into the Web 2.0 future, and executives - starting with chief operating officer Kevin Turner - stayed on message last week.

"When you think about Microsoft in the software plus services [market], we're going to offer customers a choice," Turner said, after outlining three business models he said Microsoft's customers want. Those models are: the option to install software on premise so customers can run it themselves, the option to have Microsoft host its software directly for customers to use in the cloud, or the ability to have third parties host Microsoft software.

"You will hear a lot from us over the next 12 months" about how "we will enable all of those business models," Turner said. "This is not some way out in the future [scenario]; this is where we are going to continue to evolve, purposefully and mindfully." However, he added that he has consciously slowed down Microsoft's move to hosted services so the company is clear about its plan and doesn't just blunder its way forward.

Tim O'Brien, senior director of platform strategy for Microsoft, echoed Turner's sentiment that the near-term future for Microsoft is its software-plus-services strategy when he discussed Microsoft's plans for its development platform.

O'Brien even said that Microsoft is in the process of rewriting many of its applications, as it did with the company's CRM (customer relationship management) offering, which it recently released as a hosted service, so they can be offered as services in the future.

"One big fallacy is that you can take an application architected for one-to-few delivery and call it one-to-many," he said. "We're not as far down the path of re-architecting on the Exchange and SharePoint side, but that is directionally the way we're headed. We have a huge portfolio of applications that we'll over time take in this direction."

It's commendable that Microsoft seems to have finally found a consistent message about its software-plus-services strategy, which is heartening since even a year ago no one seemed to know what they were talking about.

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