Its bid for Yahoo will see Microsoftbetting the future of the company on the
internet.
Microsoft's software is getting better, and that means it is
harder for users to justify upgrading to the latest version. At the
same time,
Google is providing a basic suite of office productivity
software for free.
Although Google's software may be basic, it is good enough for
most tasks, especially given that people generally spend 80% of
their time using just 20% of the functionality in packages such as
Microsoft Office. One could argue that Google provides that
20%.
Microsoft may fear that users will realise they are only ever
going to use 20% of the functionality they pay for. Why upgrade?
Why buy Microsoft Office at all?
Microsoft is looking for a new revenue stream as the traditional
market it has dominated changes to reflect a different approach to
buying software: a shift from software being seen as a valuable
differentiator in business to a perception that it is simply a
utility for the business, paid for through per-use licensing or
distributed freely, with suppliers making their money from online
advertising.
Gaining traction online
The internet is not a Windows platform, and for Microsoft to
succeed it will need to embrace open internet standards. At the
same time, it will need to support existing users, who are
increasingly choosing to run older versions of Microsoft
products.
Industry pundits have said the £22bn bid for Yahoo is
Microsoft's attempt to build a business based on online
advertising.
Should IT directors be concerned? The bid figure is almost six
times Microsoft's R&D budget, and it is clearly making online
advertising revenue a priority.
For those who consider Microsoft a strategic business partner,
the question will be to what degree they are affected by any
dilution of the company's traditional software platforms: Windows,
Visual Studio, SQL Server et al.