Where does Microsoft go next?

Cliff Saran asks Microsoft chief executive officer Steve Ballmer why he believes Microsoft's approach to cloud computing is right for IT departments.

Cliff Saran asks Microsoft chief executive officer Steve Ballmer why he believes Microsoft's approach to cloud computing is right for IT departments.

Microsoft is finally starting to address software as a service (Saas) and cloud computing. These emerging approaches, which put less emphasis on operating systems and software infrastructure to running IT systems, are alternatives to the technology Microsoft has until now focused on.

Ballmer says Microsoft wants to give users choice as to where applications run. That means software can be deployed in corporate datacentres, on desktop PCs, or a hosted datacentre providing SaaS. "Saas implies that all software runs on the internet. No one wants mainframe centralised computing," he says. "I believe in software plus services. Our vision is that software runs seamlessly in a number of places," he says.

In the future, Microsoft software such as Office will have a variety of modes of operation. Users can continue to buy the software and install it. They may choose to have Office streamed down from a centrally managed image of the software stored on a server or via the internet. Or they can run Office using Microsoft Terminal Services, from a thin client device, which provides the Windows GUI over an internet connection.

"We will also rewrite Office to work in a browser," he says.

Ward-Dutton says Microsoft has been at risk of being knocked back by Saas providers. "Its cloud strategy means that third-party application suppliers can build Saas applications using the cloud Windows model." This means businesses can buy Windows compatible third-party software as hosted services or buy traditional licenses.

Giving users greater choice is a good idea Chris Ingle, research director at analyst IDC, says because Saas is not always the most cost effective way to deliver IT. "Microsoft has the right idea because I think businesses will continue investing in software and hardware."

Running Microsoft software in the cloud is an alternative to outsourcing IT, says Ray Titcombe, chairman of the Strategic Supplier Relationships Group (SSRG). "But users will need to work out the legal and security implications of having confidential corporate data stored on Microsoft's servers."

So Microsoft is finally making the leap from desktop and server computing to the internet cloud. In Ballmer's vision Windows still has a role to play: he says it will enable users to run the same applications either as a software service or in a datacentre. Clearly this gives users the choice. But the real benefactors of Microsoft's strategy is third-party software providers, who will be able to offer their applications either as traditionally licensed software or as services hosted in the internet cloud.

Beyond the cloud

Microsoft is facing increasing resistance from users to upgrade to the latest version of Windows. In spite of sales in excess of 180 million units, the operating system has not been taken up by corporate users in the volumes anticipated.

"We [improved] security in Vista, but we had to break backwards compatibility to make it secure," Ballmer says. As a result, applications have needed to be re-engineered for Vista, slowing down the take-up in business.

Ballmer is adamant this will not happen again. "If we have to break backwards compatibility each time, we may as well get out of the operating systems business."

The next version of desktop Windows, called Windows 7, will be an easy upgrade for Vista users. "We will not be changing the underlying software architecture in Windows 7," he says.

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