Is Microsoft nailed to it's perch?

Last month Microsoft reorganised in to 3 divisions. Analysts predicted this move was a bulwark against Google, and that it signalled an accelerated commitment to hosted-software services. Tuesday's announcement from Bill Gates is the result, and it said that it is more important than the .NET announcement of 5 years ago, or even the Internet Explorer announcements of 10 years ago that put Microsoft head to head with Netscape in the browser wars. I would suggest that it is at least as important as these things, and I agree with the many that also suggest that the announcement will have major implications on the future of Microsoft, and not in a positive way! The key thing that it does do is legitimise the movement towards Software as a Service (SaaS), as well as "free" Open Source Software. Although Microsoft is following in the footsteps of Salesforce.com, Google, Yahoo and a host of smaller providers, this move from the giant will put the SaaS concept on the map for the general business community. Amazingly, some analysts, like Drew Brosseau of SG Cowen, suggest that this is a positive move for Microsoft because of the extra revenue streams addressed by Windows Live and Office Live. I just don't see that. I agree with the likes of Dennis Howlett and others who see the conflict this move is going to cause between these offerings aimed at the consumer and the small business, and the existing licence revenue from the corporate sector, as well as the VAR community who live off their slice of that revenue. What's in this announcement for them? How is the rest of Microsoft going to move from a business model based on licence sales to one based on subscriptions and advertising. There are other factors too. Windows Live overlaps with the current MSN and so some of the revenues generated won't be incremental, they will actually come from displacing existing MSN revenues. And will users flock to the new services in droves?

Windows Live does not seem to be anything new:

Live.com serves as the personalized starting point for Windows Live services - but isn't that like my Google or Yahoo tailored home page?Windows Live Mail is a new, global Web email service. No it's not, it's just the next version of MSN Mail and just another choice from Gmail and Yahoo Mail.Windows Live Messenger provides instant messaging, file and photo sharing, PC-based calling and more. Or in other words an upgrade from MSN Messenger to catch up with Yahoo, Flickr and Skype.Windows Live Safety Center is a Web site where users can scan for and remove viruses from their PC on demand. Isn't that like MacAfee or Norton?Windows OneCare Live, a PC health subscription that helps protect and maintain PCs via an integrated service that includes anti-virus, firewall, PC maintenance, and data backup and restore capability. More of the same Norton and MacAfee, plus backup like Storegate or Connected.comWindows Live Favourites is a service that enables individuals to access their Microsoft Internet Explorer and MSN Explorer favourites from any PC that's online. Yes, just like I already do with Yahoo MyWeb, or Del.icio.us.

Office Live at least has some potential:

Office Live Basics helps a small business establish an online Internet presence including a domain name, a Web site with 30 MB of storage and five Web email accounts at no charge through an advertising-supported model. Office Live also provides a set of subscription-based services with more than 20 business applications to help automate daily business tasks such as project management, sales and collateral management, customer management, expense reports, time and billing management, and secure internal and external collaboration - all built on Windows SharePoint Services. So we have some old, some new, and some threats to the current crop of collaboration, document management and CRM tools, but nothing you could call dramatic.

Tell me - how is all of is this going to produce revenues dramatic enough to replace the drop in both corporate and mid sized licence revenues? How are the MS VARS going to survive as this accelerates the move from traditional towards SaaS based solutions from all suppliers, not just Microsoft? At the moment I can't see this as anything but the start of a slow and steady decline for Microsoft. It could take quite a while, but how soon before we have an ex-Microsoft on our hands?

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