Yes, Microsoft senior vice president says it that bluntly in the pages of today:

The behemoth of Redmond, Wash., is methodically rolling out business software that's sold as an online service. There's a very compelling reason: For Microsoft, selling software-as-a-service means more revenues, and eventually profits, out of each transaction.

Microsoft Senior Vice President Chris Capossela puts it bluntly: "Customers will write us bigger checks." ... Microsoft is charging $10 a month per mailbox for its online Exchange service. That's more, Capossela says, than Microsoft's current cut of the average $18 a month per mailbox that customers spend with his firm and others. (He won't divulge how much more.)
OK, at least now that's out in the open.

It's OK in these times to use a sales pitch of "if you spend some money with us, you'll save money in the long run".  And the Forbes article certainly tries to make Microsoft's case on this, mentioning 2-and-a-half customers who have made the decision to switch out my product for Exchange Online.  However, nobody knows whether the promised savings are real.  Further, the analysts don't buy it -- both Forrester and Gartner have published reports in the last few weeks that say that an enterprise >15,000 employees (Gartner says greater than 10,000) run an e-mail system more economically than a SaaS/cloud model... our analysis shows that this number is even lower (and that's just for e-mail collaboration).  And these customers who are saying that they are switching their email to a cloud system...what about their collaborative apps?  How much will they continue to spend to operate Notes applications, and for how long -- and is that factored into the supposed payback?  More importantly, did they examine their on-premise deployment as Gartner suggests, and find that "collaboration economics" could improve their operational costs without the trauma and expense of a migration?  We are regularly doing that exercise at customers around the world, and finding substantial savings (see, for example, slide 13 of my Lotusphere presentation).  It will be interesting to find out.  Meanwhile, Microsoft's motivation is to keep the money coming at a time when their core businesses are increasingly under threat, their stock price is the lowest it has been in 12 years, and the best they can say is "give us more money".  Haven't they had enough already?

Link: Microsoft: Capturing Spend >
(Slight update @9:35 CST regarding customer size)

Post a Comment