Microsoft gets outside the box with software

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delivered in large measure by way of paid upgrades and, to a lesser extent, via smaller patches.

In recent months, though, Microsoft has shown that it's willing to experiment.

In January, for example, it debuted Microsoft Office Outlook Live, which takes the company's Outlook software and offers it to consumers along with storage space as part of a monthly or annual subscription.

Gates verbatim

Recently, Microsoft Chairman Bill Gates spoke to CNET News.com on a variety of topics. Below are comments he made that directly address the topic of "software as a service."

"Well, software as a service was a theme of the company meeting I think nine or 10 years ago where we heralded the idea that packaged software was done and now it was all just going to be shipped over the Internet. In fact, like many things around the Internet that were predicted to happen quickly, they're not wrong, they're simply things that take more time.

"So there will be more of a mix of on-premise and off-premise software, and these Web services standards that we've promoted and built the tools for more than any company in the industry are very key enabling technologies to make that possible--so that you could even at some point run some custom logic on premise, even if the main application is hosted somewhere else. Or you could have one application (on site) and another application (off site) and still be able to get that kind of rich integration. So Web services are very powerful in this environment.

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Sheryl Kingstone, an industry analyst with the Yankee Group, points out that just because Microsoft hasn't offered many products this way doesn't mean the company is opposed to the idea. In fact, she gives Microsoft credit for spotting back in the mid-1990s that the Internet could be used as a mechanism to deliver games and other software.

As for the business side, she says, it's "just not something that they have put a stake in the ground yet and said that they want to go after."

Ultimately, though, analysts say, the trend is headed toward a greater use of hosted software, particularly for small and midsize businesses that are looking to avoid the complexities and upgrade hassles that come with running their own software. What such customers really want is software that's functional, easy to use and has a low total cost--needs, Kingstone said, that the hosted software approach is well-suited to meet.

Such a move, though, presents more than technical hurdles for the world's largest software seller. One of the key issues is how Microsoft will price such offerings.

Gates agreed that pricing remains a big challenge. It's relatively straightforward for truly generic applications, but it quickly grows thorny as companies want to run their own unique business processes. Meeting the business needs of one customer could ultimately interrupt or slow work for another company.

"It's very hard to do service-level agreements and resource pricing when things get arbitrary," Gates said.

For Microsoft and other traditional software vendors, though, service-based pricing requires a broader shift in economics. Such companies

[Sentinel]

Puh-lease!!

Software as a service? Puh-lease! This is another Microsoft attempt to impose their criteria on the end user (who doesn't have much of a choice anyway). IF Microsoft thinks that such a strategy will work, they must be smoking something (I wonder in fact, why many people still use Office2K instead of 2003...). There will be those who subscribe and use their software while connected to MS's servers, but I think most clients prefer a one-time purchase, the traditional way. It is far more economic for the end user (but then again, MS doesn't care, all they want is the users' money). Oh, but what about the piracy problem, it's hurting poor Microsoft, isn't it? Well, this strategy may help somewhat, but I believe that hackers will most likely try to go against the "hosted application" servers. And then Microsoft will have a bunch of angry clients calling because they can't write the project they need to hand in tomorrow. Or what happens when the "server is too busy" (like happens with Hotmail sometimes)?<br /><br />Microsoft: instead of forcing users to pay over and over for the same crappy software, maybe you should think about bringing down your prices a little. Why will I pay over $300 for MS Office when OpenOffice is free, is a one-time download and does basically everything else MS Office does. And even the HTML it generates is much better than Microsoft Office's propietary "Save as Web Page" feature.

[Jon N.]

Who is M$ Kidding?

What?! Is this a joke? If so, it's possibly the biggest "joke" on the net! <br />Yea, piracy, virii, &#38; crackers are a problem, but is this the way to solve the problem ? NOOOOO! <br />If you want to see a mass exodus by the mass market constituancy switch to open source code, and OS X &#38; the Tux on top of the dogpile, then by all means do this! It would be like committing corporate hara-kiri! <br />Everybody wants the convenience of download, but I know that I will NOT pay $2-$300 annually for this software! Omar's right! Somebody in the boardroom must be smoking somethin'!

[PolarUpgrade]

They ain't smokin': They is developin' .NET for LoooongHorn

The strategy is clear enough. This is.NET reprhrased. Shame on CNet for not reporting the obvious.<br /><br />It seems evident that Microsoft will simply roll out Longhorn, whose functionality will be browser indifferent and .NET subscription centric. That is, the .NET platform will be the communications vehicle for desk-to-host, obsoleting Firefox et al, and making things such that all software has to be developed on the .NET paradigm to work meaningfully on the C Sharp Looooooong Horn.<br /><br />Once software makers are compelled to developed along the .NET lines, which originally specified that even developer tools and code libraries might go subscription, the market will all go subscription just to support the cost of developing .NET wares.<br /><br />There is the simple fact that once software firms are forced to invest in .NET they shall need to recoup the investment, by adopting the subscription paradigm as well.<br /><br />This was the stratgey with the move from VB6 to VB .NET--one had to buy the whole Visual Studio package to update to VB.NET in a way that allowed code distribution. Once one has paid for all of Visual Studio, the incentive is to go to the pure .NET language as one has bought it all.

[landlines]

Potential trap for M$

If software is a service, customers might have a much better chance of holding M$ to PERFORMANCE STANDARDS!!!!<br /><br />OOPS!!! MAJOR MISTAKE!!! UNDO! UNDO!

[publicstatic]

Because .NET is too hard to those VB idiots

It is very very difficult to M$ to educate those VB "programmers" how to use OOP language. So M$ decide to do it on its own.

[genemosher]

Network Computing is the inevitable future

Network computing is the inevitable future. Intelligent displays plugged into the network will replace dumb displays plugged into PC's. The PC will become an optional, undesireable, unneeded part of the software experience. It's aready happening. It doesn't matter that the idea of the PC being functionally uninvented gives PC lovers hemorrhoids. That's not going to matter. The software user of the future can do so much more with the network than he can with a PC that he simply does not need a PC.

[Michael Grogan]

And all of everybody's data...

...is on the net too! What a grand day for big government and mega corporations! There is not, and never will be, any possibility of data privacy on a network. ANY security scheme on a net can and will be cracked; and that most easily by those who implement and oversee the implementation of the security attempts.

[Thomas, David]

Blah Blah Blah

I've heard this same crap for thirty years. The truth of the <br />matter is this Microsofts attempt to gain more control over the <br />market place. We already being forced to use .Net and follow <br />microsofts "best practices". Networked computing is already <br />here. But do you want to do it the way microsoft dictactes it? <br />Do you want them to think for you? They seem to have a great <br />:-P track record so far in that category. Guess that's why they <br />have such a plethora of successful business apps. Oopps they <br />didn't buy Siebel, PeopleSoft, JDEdwards, Intuit, and a ton of <br />others yet. Hmmmm ... oh yeah they have great development <br />tools. Darn.

[Stomfi]

The Network is the Computer

64+ bits gives the power to create telco managed grids of telco supplied end user connection machines. A Unix or Plan 9 like OS would give users the unprecedented power of a supercomputer grid. End user boxes would not have to be very powerful.<br />The enduser pays for the grid network box, instead of the ADSL or cable modem.<br />The rest of money is spent on sophisticated human interface devices. Software will probably be free.<br />Because the network is the computer and managed by the telco, the possibilty of illegal activies would be restricted.<br />I don't see the MS model fitting in to this architecture, but maybe the XBox is their grid machine.

[Michael Grogan]

I should have spoken more carefully.....

....when I said the data will be on the net I actually meant that it would be more inherently network accessable. These guys aren't talking about downloading programs whenever you need them, they're talking about uploading the user data to be manipulated on central computers. Now they have access to ALL of your data as well as controlling all of the processing power; you can bet the next step is keeping all the data on the server for 'faster access' I would cite gmail as the precedent.

[John Kuzak]

sophisticated human

<a class="jive-link-external" href="http://www.analogstereo.com/lincoln_owners_manual.htm" target="_newWindow">http://www.analogstereo.com/lincoln_owners_manual.htm</a>

[Below Meigh]

Terminal & Mainframe...again...

Hmmm, let me see...run programs remotely...hmmm...big iron <br />at one end and client/terminal/desktop/console at other end.<br /><br />And this is new?? This is Bill Gates brainstorm? Puh-lease is <br />right!<br /><br />Cyclical. <br /><br />Bill...get your head out of the sweater dumpster and just walk <br />away. You have enough money now. Stick with Melinda and just <br />donate to those that need it. Let the real people that actually <br />NEED, USE and WRITE software do their thing. Enough with <br />putting ideas in Adobe's head what WE need versus what you <br />THINK we NEED.<br /><br />"Hmm, not only are the sheeple buying a license to even power <br />on their computers, they also fork over $50/month just to <br />connect to the net! And now, we can nickel-dime them for <br />content, xbox goodies and the subscriptions to even launch and <br />run something that isn't even there! Brilliant!"<br /><br />(I should have my own (insert magazine, blog, article, tv show) <br />on predicting the future of computing...)