Microsoft to make big move into 'cloud computing' with revamped Office; confronts Google
SEATTLE; Microsoft Corp is making its biggest move into the mobile, Internet-accessible world of 'cloud' computing this week, as it takes the wraps off a revamped online version of its hugely profitable Office software suite.
The world's largest software company is heaving its two-decade old set of applications -- including Outlook email, Excel spreadsheets and SharePoint collaboration tools -- into an online format so that customers can use them on a variety of devices from wherever they can get an Internet connection.
It wants to push back against Google Inc, which has stolen a small but worrying per centage of its corporate customers with cheaper, web-only alternatives, which remove the need for companies to spend time on installing software or managing servers.
"It's obvious that Microsoft has to do this if they're going to remain competitive with Google," said Michael Yoshikami, chief executive of money manager YCMNET Advisors. "It's something they have to do."
Microsoft shares rose 3.7 per cent on Monday, the largest gain in a single trading day since September, partly buoyed by hopes that it can ultimately boost profits by extending its software dominance to the growing cloud sector.
"If they execute effectively and it's adopted, it could be a game changer," said Yoshikami. "Whether or not that will happen is a whole other story."
Microsoft has offered online versions of some Office programs -- chiefly Outlook email -- for its corporate customers for several years, and last year rolled out free versions for individual home users.
Chief Executive Steve Ballmer is set to present an overhauled and updated set of offerings -- collectively called Office 365 -- at an event in New York City on Tuesday morning, underlining the company's newfound online focus.
GROWING MARKET
The market for web-based software services is heating up, and every company, government department and local authority is getting pitches from Microsoft and Google whenever they reevaluate their office software.
It's a new challenge for Microsoft, which built itself up on expensive versions of software installed on individual computers. That business model turned the Office unit into Microsoft's most profitable, earning more than $3 billion alone last quarter.
Microsoft's plan is to make up for smaller profit margins from web-based applications -- due to the cost of handling data and keeping up servers -- by grabbing a larger slice of companies' overall technology spending.