“Productivity is our life blood,” says John Case, Microsoft’s Corporate VP for the company’s Office product line. “It’s part of the company that we say is our mission.”
Case was speaking at a media briefing ahead of Microsoft’s launch of their Australian Cloud Solution Provider program for resellers with the company making the case for integrators and IT support businesses to sell the Microsoft Cloud Services.
For Microsoft this is part of the evolution from the 1990s “PC on every desk” strategy to a mobile and cloud first service.
This shift doesn’t come without pain for Microsoft and it’s resellers, the cloud is a fiendishly competitive space with Amazon regularly dropping prices and Google steadily eating into the productivity suite market.
Making matters worse for Microsoft are that Google are moving into their hosted server space with the announcement that Google’s Cloud Platform now supports Microsoft Server.
Case though is sanguine though about the threats from Google, particularly the increased commissions being paid to resellers which will only put more pressure on Microsoft as resellers consider the options.
Probably the toughest part of the shift for Microsoft are the reduced margins – although for resellers the change is far more wrenching as the profits from cloud services are far lower than installing servers.
For Microsoft the key to success in the cloud depends upon the confidence of customers; security and trust are going to make and break all cloud services, something that Case acknowledges.
Ultimately though Case sees Microsoft’s network of resellers and partners as being the company’s best defense against Google and the shift to the cloud. Whether that network is strong enough to overcome a structural shift in the market place remains to be seen.
Productivity may be the lifeblood of Microsoft’s business but as margins erode, it may be that that market is not longer lucrative enough to sustain a $400 billion dollar business. Microsoft’s fight for survival is on in the cloud.