More on Microsoft and SaaS

It's just another day and another SaaS-related announcement for Microsoft (remember this one from earlier this week), which has rapidly gone from lost on SaaS to gung-ho on the hosted model -- although we'd still like to see Redmond clean up the mess that is "Live" branding. With Microsoft now challenging Google's supposed domination of all things Web, observers are starting to wonder whether Redmond can really keep up with its Silicon Valley rival. One even posits that Microsoft is chasing online dollars (in vain) out of jealousy toward Google.

We all know how wealthy and powerful Google has become in a short amount of time and, here at RCPU, we're pretty sure that Microsoft might as well give up the fight in consumer search and maybe even in online advertising, one of Steve Ballmer's pet categories. But we're skeptical of the warnings of impending doom for Microsoft coming from the anti-Redmond crowd.

Instead of asking how Microsoft can "catch" Google in categories such as hosted applications, we wonder why Microsoft wouldn't be able to build a business in those areas. There's plenty there for the taking -- hosted applications, enterprise search, unified communications and other collaborative categories -- and it's not as though Google has booted Microsoft out of the enterprise. Sure, Google Apps looks pretty cool, but Microsoft Office -- the old-school desktop version -- is still top of the heap when it comes to productivity apps. And while nobody "Live Searches" anything (we all "Google," of course), not many people go rushing to Google's word processor or spreadsheet before opening Word or Excel, either. Will that change? Maybe, but if it does, it'll take a while. And Microsoft isn't standing still.

We've been critical here in the past of Microsoft's SaaS strategy, but it finally seems to be coming together. Is Redmond behind Google in terms of online technology? Maybe, probably -- but Google is still way behind in market share in categories such as productivity apps. (Besides, when hasn't Microsoft been behind at least one big rival in terms of innovation?) Yes, the Yahoo overture reeks a bit of desperation, but at least it's a sign that Microsoft won't be content to be just a Windows and Office company in the enterprise evermore.

Google isn't going away. It's a powerful force in the industry, and it's only going to get bigger and stronger. That's a good thing, as competition tends to make everybody's slice of the pie larger. (Perhaps a lot of pundits just aren't used to Microsoft not dominating everything, and they confuse genuine competition with impending doom for Redmond.) But Microsoft isn't ready to give up on enterprise Web services, either. Is Redmond overreaching with its myriad of investments and initiatives? Probably, but that's been a problem there for a while now. What we like to see, though, is Microsoft (and its partners) fighting for the enterprise and deciding that the company can compete there not only with packaged software but also with online services.

Mark Twain might have had a line about Microsoft's impending doom...something about reports of it being greatly exaggerated.

What's your take on Microsoft's SaaS strategy? How powerful is Google in the enterprise right now? Let me know at [email protected].

Posted by Lee Pender on March 05, 2008