From health care systems to cellphones, Steve Ballmer wants Microsoft “to invent everything that’s important on the planet.”
http://www.nytimes.com/2009/10/18/business/18msft.html?th&emc=th
Microsoft is very much aware that they are facing a present where the traditional desktop OS and traditional thick desktop apps (i.e. Office) are being squeezed and a future where these lines will have less relevance. Without a path forward – MS Online (the first full Cloud app suite for SMB/Enterprise – essentially MS Office in the Cloud with Rich Services clients) and to make “Cloud run better on Win7″ – Microsoft is looking at a bleak future with diminishing revenue streams.
The greatest threat the Cloud poses is not to rich client hardware – there will continue to be a solid place for notebooks and high-powered mobiles (e.g, ultraportables, which differ from netbooks in that they are designed to provide top-end-quality richness in a netbook sized form factor). Yet whilst the new world of Cloud is opening new opportunities for HW manufacturers and OEMs alike, it is making the game harder to play for the old school OS and desktop apps. Users want the agility that Rich Services Cloud provides – any device, any where – rather than the binding client-server model that traditional desktop apps provide. Likewise, IT wants to leverage the centralised management and administration of Rich Services Cloud; continued cost pressure is forcing them to abandon the high-end maintenance model associated with traditional OS and desktop apps.
Microsoft, if it wants to maintain shareholder value and secure a place in this new world, has to adapt to the reality of the Rich Services Cloud, and both Steve Ballmer and Ray Ozzie have recognised this. They have bet Microsoft’s future on the relevance of Rich Services Cloud. Whilst Microsoft will look at a diminution of their revenue streams from the “cash cow” days of Windows OS and Microsoft Office, their role in a world that includes KVM-type platforms (such as the WinXP KVM in Win7) and Rich Services Cloud apps (such as MS Online) will continue to have relevance. In embracing further value-added apps that utilise the Rich Services Cloud model, Microsoft may find its next “cash cow” in vertical suites. Whether this works for the depends upon whether they can make a splash early on with MS Online, and show that it can engender innovation in office productivity (i.e. compete very favourably with Google Apps), whilst providing the better usage models and user experiences.
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