Hi all,

First of all this post is an opinion based on my perspective of the new actual Microsoft and my knowledge about Cloud Computing! It’s important that you understand that I don’t have any inside information or whatsoever!

Currently, the big earning of Microsoft is licensing. Their customer has to pay a licensing fee, buy their own computer/servers and hire their own technology staff. So, the TCO (Total Cost of ownership) is high and, worse, this business model is not so flexible and so adaptable to the necessities that the organizations have to face in a global village.

If you think in a software/infrastructures view you have to answer two questions: Is your software/ infrastructures supporting and adding real/full value to the organization? Will your software/ infrastructures support/handle the organization needs in medium/long term? It’s now, that we start to think that scalability, elasticity and adaptability is very important for the life of an organization/enterprise. This issues are so important that organizations don’t bother to lost some of the in-plan features that some software architectural models like componentry, three-tier, event driven, etc , implemented. Instead, a conceptual view that software should be looked as a service brought SOA (Service Oriented Architecture) the mother of business models like: SaaS (Software as a Service), PaaS (Platform as a Service), S+S (Software plus Services), WOA (Webservices plus objects), etc…

So, in a Service business world, Microsoft business model (till now the traditional model) has not the same importance and in consequence the same revenue! However, Microsoft is not alone in the market. Microsoft has to count with their partners, ISVs (Independent Sales Vendors), final customer s, etc… It’s a really complex equation with heavy calculations! I’m not saying that is an impossible equation, I’m only saying that it’s a little messy and the approach has to be well designed in order to a continuous win-win relation can be guaranteed.

Microsoft didn’t pass right to SaaS and innovates the actual business model adding a kind of SaaS. The result was a new business model that mixes traditional software with cloud based software – Services plus Software (later on I will talk more deeply about this business model). Ok, we can see that this model is a way to not lose the old business model and it opens doors to the future. In my personal point of view and actual Microsoft state is the right approach.

However, we need to think that if we are speaking of Services, a service is not bought, is rented. A service business model is extremely demanding to an organization because the customer s will not pay a license fee plus maintenance, instead will be made a contract to the customer and is paid from time to time. This means that you will not receive a bucket of money and “bye, bye customer… see you in the next version” but you will need to have a true customer orientation and your earnings will be a reflection of this relationship. Your service it really has to be an asset to your customer and therefore the two questions above, without any doubt, need to be answer: YES, YES!!!

So, how Microsoft can make money in a world which is not the leader or the only huge player?

(In a next post

Principles of writing: SaaS\Cloud-Computing )