Possession, it would seem, is no longer 9/10s of the law. We’re all drifting ever closer towards “The Cloud” – the gradual shift from personal, physical ownership of computer resources to having someone else remotely own and provide these services to you, on demand, over the Internet.
At its Scottish Partner Briefing session in Edinburgh yesterday, Scott Dodds, Peter Ferry and others clearly and unambiguously set out Microsoft’s Cloud Vision, under the tag “We’re all in”:
We're all in
The premise (or should that be off-premise?) for Microsoft is clear. Many of its corporate customers find its sometimes convoluted on-premise licensing model confusing and overly complex. Add to this the fact that Microsoft does not directly manage the vast majority of its small and mid-market customers (devolving this responsibility to its Partner Network). As a direct result, Microsoft currently estimates that it is missing out on potentially as much as 40% of the licensing revenue due to it from its corporate customers.
So, the cloud-based subscription model, theoretically, allows Microsoft to realise 100% of licensing revenue. It’s a well-furrowed path which has already been well exploited by the likes of Salesforce.com.
But it’s not necessarily going to be an easy sell. Microsoft will face resistance from in-house corporate IT departments, who will not fail to notice that outsourcing to Microsoft the provision of the service which they have (until now) provided represents a pretty significant threat to their job security.
Then there’s the frequently-raised concerns over security of confidential information, privacy and data goverance.
But perhaps most fundamental of all is the paradigm shift from personal ownership. If we move this from the corporate space to the consumer environment, there is something extremely re-assuring about physical ownership – having what you hold, and holding what you have. As a music fan, I’ve only recently come to terms with the switch from CDs to storing all my music on iTunes. OK, I can no longer touch my CDs, but at least I’ve got my physical music files under my immediate control.
You’ll note that the previous sentence contained 3 ‘my’s.
In a musical sense, the introduction of services such as Spotify and Last.fm begins to shift this essence of ownership away from the self, and into the hands of third parties. I’m sure it won’t be long before the notion of physical ownership of MP3 files becomes a quaint old throwback to the days of yore. Instead, all we’ll own is our own, personal playlists – with the physical files themselves held by the likes of Spotify, Last.fm, et al.
Microsoft contends that the shift is already happening. In the consumer marketplace, it already offers a range of cloud-based services, and all are well used:
- Hotmail has 369 million users worldwide;
- Windows Live has 500 million active ids;
- Bing serves out 3 billion queries per month;
- MSN has 600 million unique users; and
- XBox Live has 20 million subscribers.
If we look at the Corporate marketplace, according to Microsoft, 20 million businesses are already using Microsoft Cloud Services, and this figure is only set to grow.
Perhaps in this post recession(?), credit-conscious world which we now live in, the most compelling reason for businesses to buy Cloud-based services instead of on-premise services is the move from CapEx to OpEx to meet the cost of their IT needs. With Capital becoming ever more valued, the ‘pay as you go’ or ‘burn as you earn’ model becomes increasingly attractive to businesses. It provides the flexibility to cope with peaks and troughs in demand and to throttle back costs when there is a low level of demand for their service.
Whichever way this plays out, one thing is certain – we’re set for a gradual change. Microsoft views it as a “multi year journey from legacy to cloud”. And whilst it continues to push Cloud-based solutions to the marketplace, Microsoft won’t forsake those customers whose preference remains for on-premise licensing. It will continue to service this marketplace as well.
Posted by Howie 
