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Google is Microsoft's New Open Source

Posted by ryuzaki0 on from the fully-armed-and-operational-battle-station dept.

Robert writes "Steve Ballmer told investors recently that Microsoft's biggest challenge is embracing software-as-a-service business models, as embodied by rival Google Inc. Investing in software as a service and advertising-supported businesses is a challenge like that which the company faced at the dawn of the open-source movement. To paraphrase him heavily, the takeaway was: Yes, we're investing a lot, but it's riskier, long-term, not to do so. We have a lot of cool stuff coming up and, yes, we are also playing catch-up on a couple of fronts. His speech came a month after Microsoft revealed that its R&D budget for fiscal 2007, which ends mid-2007, would rise to $6.2bn." From the article: "We've got to make this transition, which our industry is making, from software as a product to software as a service ... If you want to be a leading software company, you've got to be a leading software-as-a-service company."

9 of 188 comments (clear)

  1. Nothin wrong with this... by IAmTheDave · · Score: 4, Insightful

    Microsoft has real competition, forcing them to develop better, more competitive software. Downside?

    --
    Excuse my speling.
    Making The Bar Project
    1. Re:Nothin wrong with this... by El+Cubano · · Score: 5, Insightful

      Microsoft has real competition, forcing them to develop better, more competitive software. Downside?

      The downside for Microsoft is that they are their own worst enemy. People already pay Microsoft for their software (either embedded in the cost of a PC or at the store for things like Office) . Now Microsoft is in the tough position of getting people to transition from paying for software upfront to paying for it as a service without people realizing they are getting the short end of the stick. This will be much easier with things like office and other products you typically buy in the store. For things like windows, it will be hard to convince people that they need to pay monthly to use their PCs after they have already paid up front for the hardware and OS. Of Microsoft makes it too painless, they shoot themselves in the foot by not making as much as they could. If they make it too painful, they stand to lose marketshare, especially if companies like Novell and IBM come out and really pump the idea that you don't have to pay to keep your Linux machines running.

    2. Re:Nothin wrong with this... by kfg · · Score: 5, Insightful

      Downside?

      The competition is an illusion.

      Google exists in an entirely different sphere of influence than Microsoft. Microsoft is not protecting its base against competition so much as it is doing what it has always done:

      Found out that someone else is making money and trying to muscle in on it.

      Microsoft is in the software business. Google is not in the software as service business. They are in the advertising business, just as a billboard company is not in the real estate business, even though they must interact with the real estate market in order to sell their advertising product.

      And the only people demanding "software as a service" are the advertising buyers/sellers.

      KFG

    3. Re:Nothin wrong with this... by MightyMartian · · Score: 4, Insightful

      Except that MS is not fighting on their own turf now. I think the odds are a lot less in MS's favor this time. It has sorely neglected the Internet, and every attempt to get its Internet services to the fore have failed miserably. Between Google and Firefox eroding the browser base, MS is going to have to fight this one by rules it did not make up.

      --
      The world's burning. Moped Jesus spotted on I50. Details at 11.
  2. Downside! by Alien54 · · Score: 4, Insightful
    When I have to rent my word processor and spread sheet program.

    This is vaguely similar to the RIAA, etc wanting us to merely rent music, or repurchase it in a new format every so often, instead of owning it outright.

    Music as a service. Software as a service. What's the difference?

    --
    "It is a greater offense to steal men's labor, than their clothes"
    1. Re:Downside! by CaymanIslandCarpedie · · Score: 5, Insightful

      No real difference and I think both are fine. You want to pay $x per song and own it forever, you can. You want to pay $x per month for unlimited use (but stops when you stop paying), you can. Choice is good.

      That said I personally like the software as a service model less than the music model. At least with the music you are constantly getting new material for the monthly price where software is (more or less) just paying for the exact same thing again and again. But thats just me and even in those cases depending on the monthly cost to "rent" vs the cost to "buy" it could still be a good deal. Anyway, I'm always glad to see more choices even it I don't happen to like one of them. Someone else might really like the other choice for some reason and I'm glad its available to them.

      --
      "reality has a well-known liberal bias" - Steven Colbert
    2. Re:Downside! by Twiceblessedman · · Score: 5, Insightful

      The problem will arise when the only choice left is the service model. It's not good for the customers.

  3. Transitioning to Irrelevance by ewhac · · Score: 5, Insightful
    Fine, Microsoft, go right ahead. Transition your business to, "software as a service." And when you get there, you'll realize there's no "there" there, and will implode to a business of relative insignificance.

    A hammer is not a "service." A paintbrush is not a "service." A car is not a "service." They are tools. And, unless people use them very infrequently, people don't rent their tools. They buy them so that they may own them. Software follows this analogy to a very high degree. Software is a tool and, as such, the market for "rented" tools is way way smaller than the pundits are predicting. This will become even more true as Open Source solutions continue to make inroads and force aside overpriced proprietary solutions that are buggier and offer almost no extra compelling functionality.

    Microsoft does know how to Pwnz0r and expand existing markets but, so far, they have largely failed to create new ones. Software-as-a-service is a dead end, especially for a company the size of Microsoft.

    Schwab

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    Editor, A1-AAA AmeriCaptions
  4. What's the problem? by i+am+kman · · Score: 4, Insightful

    What's with all the rants about renting software. That's hardly the point of the article or service-based software.

    Service based software has many revenue streams and powerful advantages. First, it'd be great to have a virtual desktop that followed me whereever I logged into. Not only do my files follow, but I can login to a kiosk and actually edit my Powerpoint before a presentation (without the danger of locally saving it). This is a great model (with enough bandwidth) that facilitates collaboration and mobility.

    Second, many companies are already paying through the nose for a similar model. We pay hundreds of dollars/year/user for PC service support with software. Many folks only occassionally use the MS apps, but we have to buy licenses for each PC. It would be FAR cheaper if we could centrally host the applications and pay by usage. And this would also enable us to automatically backup files and allow users to access programs from home. Users often lose data when their desktop crashes. No more with service-based software!

    Third, look at the Turbo-Tax model. It's $70 for the desktop version (PLUS electronic filing fees) and $20 online with FREE electronic filing. The service based model would be similar. Pay $500 for MS Office or $40/year to use/access the same thing. It's likely to be MUCH cheaper.

    Fourth, they'll also license it to folks like Google who will then provide it to us for free (or VERY cheaply as a premier member) as a service and part of their total desktop management.

    Just wanted to point out that there's many good things about this. Dismissing anything MS does simply because it's MS totally misses the point. Sure, it could (and might) suck, but it could also be a great thing.