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 Channel Futures

Cloud


Microsoft’s Cloud Strategy: Three Reasons to Worry

  • Written by Joe Panettieri 1
  • October 20, 2010
When Microsoft announced plans to re-brand its SaaS platform from BPOS to Office 365, I took a day or so to digest the news. No doubt, Microsoft has made some solid SaaS and cloud computing moves in the past year. But I believe this week's rebranding efforts reveal that Microsoft's cloud initiatives are experiencing considerable turbulence. Here's why.

Consider two recent moves:

When Microsoft announced plans to re-brand its SaaS platform from BPOS to Office 365, I took a day or so to digest the news. No doubt, Microsoft has made some solid SaaS and cloud computing moves in the past year. But I believe this week’s rebranding efforts reveal that Microsoft’s cloud initiatives are experiencing considerable turbulence. Here’s why.

Consider two recent moves:

1. Exit, Stage Left: Microsoft earlier this week revealed that Chief Software Architect Ray Ozzie will be leaving the company. CEO Steve Ballmer put a positive spin on Ozzie’s departure, claiming Microsoft’s “progress in services and the cloud” was “now full speed ahead in all aspects of our business.”

2. What’s In A Name?: On October 19, Microsoft announced plans to dump the BPOS (Business Productivity Online Suite) brand, in favor of a new Office 365 brand. Matt Weinberger, over on The VAR Guy, likes the branding move and he also applauds Microsoft’s SMB cloud efforts. But I’m not sure I fully agree.

When it debuts in 2011, Microsoft says Office 365 will include Microsoft Exchange Online, Microsoft SharePoint Online, Microsoft Lync Online and the latest version of Microsoft Office Professional Plus desktop suite. Translation: Microsoft is taking one of its strongest brands — Office — and linking it to the cloud. (Here’s a comprehensive Q&A from Microsoft.)

Three Signs of Trouble?

What is Microsoft really saying here? A few potential answers, based purely on my speculation:

1. The BPOS Brand was stalled: I suspect many customers and partners could not follow YATAFR (yet another technology acronym from Redmond). Perhaps similarly, Microsoft may have faced challenges with Office Communications Server, which is now rebranded as Microsoft Lync.

2. The BPOS Brand was tarnished: Recent BPOS outages cast a bit of a cloud over Microsoft and its SaaS strategy. By changing the brand to Office 365, Microsoft is suggesting that (A) the company’s SaaS strategy is ubiquitous like Microsoft Office and (B) Microsoft’s SaaS platform is reliable and online 365 days out of the year. But the new name is hardly original. Just ask Seagate’s i365 storage as a service business.

3. Perhaps Ray Wasn’t Really the Man: No doubt, Microsoft has some promising cloud platforms. I hear positive buzz about Windows Azure, which continues to attract more and more ISV interest. Moreover, offerings like SharePoint Online and Exchange Online are widely popular in the SaaS world.

But something just wasn’t clicking with Microsoft’s All In cloud efforts. A few examples: Exchange 2010 has been widely available on-premise for nearly a year but it’s not yet widely available in Microsoft BPOS. That’s a real head-scratcher. Moreover, SaaS service providers like Intermedia have long offered hosted Exchange 2010, meaning that Microsoft trails its own Exchange partners in the cloud market.

Are the items above Ray Ozzie’s fault? I doubt it. Was it a coincidence that Microsoft announced Ray Ozzie’s imminent departure the same week that the company announced rebranding plans for BPOS? Perhaps.

But something doesn’t add up…

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Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Cloud

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3 comments

  1. Avatar Anthony C October 21, 2010 @ 1:42 am
    Reply

    YAGAJP- yet another great article Joe P!

    I get the tone of doom and gloom for the MS Cloud, but do you think it’s a matter of time (and endless amounts of available capital infusion) before this becomes somewhat of a success. If so, how will it impact the MSP community?

    For some reason (aside from profitability) I am really hesitant to move any client, or even recommend prospects, to the MScloud. It seems like I’d be giving up a client by doing so….just saying.

    AMC

  2. Avatar Joe Panettieri October 21, 2010 @ 1:51 am
    Reply

    Anthony C: Thanks for the note.

    I don’t think Microsoft’s cloud efforts are doom-n-gloom. On the contrary, I think they will succeed. Much in the way that Oracle’s databases evolved (mainframe, mini, client-server, Web, etc.) I think Microsoft will successfully evolve its software to cloud.

    End-users (enterprises) will benefit. The party story is less clear. How many MSPs will truly profit from Office 365? Hate to say it, but I think the real money for MSPs working with Microsoft involves software customization. The same way that ISVs profited from NT Server, I think MSPs that can do some code work will profit from Windows Azure cloud… But I suspect less than 10 percent of the MSP population has that type of skill set in-house.

    Still, let’s not bury Microsoft. The company remains very profitable. And those profits are getting reinvested in cloud.

    The other big issue is branding. Question: How was Microsoft so good at PC branding (Windows, Office) and so lousy at cloud branding (BPOS, and 1000 other name iterations)?
    -jp

  3. Avatar Michael Proper October 21, 2010 @ 2:01 am
    Reply

    Joe,

    Like always, thank you for the update and perspective!

    After a couple hick-ups http://twitpic.com/2zdn06 . We (curious crowds at the Gartner Symposium event) were able to review the new Microsoft Office 365 (office online) today after going live with the Beta (DNS was not even fully propagated yet).

    Here’s some details regarding Microsoft Office 365:

    Pricing – http://twitpic.com/2zd1dn

    Beta – http://office365.microsoft.com

    Wallah / Was Working – http://twitpic.com/2zdn5i

    And here are some details regarding Window Asure:

    No Show or No Dice – Humm: http://twitpic.com/2zdoou

    The next couple years are going to be fun!

    Michael Proper

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