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Monday, March 03, 2008

Software as a Service Challenges Microsoft

Microsoft made another announcement about how the company continues to move towards distributing applications online as services rather than the "out of box" experience that built the company.

Most of Microsoft's success has been because of its marketing prowess; therefore, marketing and not technology will determine its success in getting into the Salesforce/SAP type services field. Yes, the technology is different, and the sales channels are different, but many of Microsoft's customers will be happy to try them out as a services vendor because they recognize the breadth of productions, likely integration with existing products -- and best of all, when something goes wrong, it's on the backend, which means it is clearly Microsoft's problem.

Imagine -- getting the industry standard benefits of using Microsoft's database and email technologies, to name a few, and it's up to Microsoft to keep the applications at your fingertips at all times, not your IT department.

In most areas, Microsoft's software isn't the best, but it's good enough, so the company will have to compete on price and reliability if it wants to win in the relatively new world. Renting versus selling will mean less cash up front for Microsoft, and the company will have to work harder to keep customers. But if they can deliver a good product as service, they mind find increasing loyalty because customers will keep coming back without the same level of installation headaches.

How well Microsoft conveys its marketing message to its existing customer base will decide if Microsoft's future will be brighter or darker in the days ahead.

By John Gartner at 09:48 PM | Comments (0)

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