Today Microsoft (NASDAQ:MSFT) CEO Steve Ballmer will host a live web-cast from the company’s New York office this morning, where he is expected to announce “Office 365,” the company’s latest software package that will feature cloud capabilities similar to Google (NASDAQ:GOOG) docs. As the world’s leading software company, the move from Microsoft has been long awaited by both consumers and investors. Reuters believes, “It wants to push back against Google Inc, which has stolen a small but worrying percentage of its corporate customers with cheaper, web-only alternatives, which remove the need for companies to spend time on installing software or managing servers.”
The cloud is widely held to be the next major platform of competition for leading tech product and service offerers, with web leaders Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), and others, recently announcing new cloud initiatives of their own. Apple made its official break into cloud computing last month at its WWDC conference, where Steve Jobs presented the company’s plans for “iCloud” a service that will allow users to access any or all of their information stored on a mobile or PC device through cloud servers.
The move to cloud software will present a challenging shift for Microsoft’s business model, which has thrived in the past on sales of physical software installed on individual computers (generated $3 billion in revenues from MS Office last year). More from Reuters, “Microsoft’s plan is to make up for smaller profit margins from web-based applications due to the cost of handling data and keeping up servers by grabbing a larger slice of companies’ overall technology spending. Last October, when it rolled out a test version of the new service, Microsoft said it planned to charge from $2 per user per month for basic email services to $27 per user per month for advanced offerings. Google charges a flat fee of $50 per user per year for its Web-based Google Apps product, which offers email, calendars, word processing and more online.”
Microsoft will follow Google’s lead in hosting users’ data remotely via cloud data storage centers, but will also offer companies the option of storing data on individually dedicated servers. Despite Google’s speedy entry into the software market (estimated market share of 40 million), Microsoft still holds a wide advantage in terms of its “Office” user-base (estimated 750 million users) and also has a tremendous advantage in terms of customer’s familiarity, habituation, and loyalty to its software. The move to the cloud should only sharpen the company’s edge on competitors.
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