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Microsoft: Cloud computing could undermine margins

08 июня 2009

Though it's a "huge" revenue opportunity, cloud computing will likely put pressure on Microsoft Corp.'s margins, a senior company executive said.

The remarks by Ray Ozzie, Microsoft's chief software architect, appear to confirm fears that online software products, which Microsoft is rolling out, could undermine the company's margins over the long term.

Redmond, Wash.-based Microsoft, which sells most of its software on a physical basis, has been relatively slow to adapt to the trend towards online software. Although online software sales are growing, a too-rapid shift could undermine the profitability of its core software products. Microsoft's software products, such as its Windows operating system and the Office productivity applications are on over 90% of the world's personal computers.

"The margins on (online) services aren't what the margins on software are," Ozzie said at an industry event in Palo Alto, Calif. Thursday."It will increase our profits, it will increase our revenue, but you won't have the margin."

Ozzie, who picked up the baton as Microsoft's senior technology strategist following the departure of founder Bill Gates, when Gates left full-time work at the company last year, is spearheading the company's move into cloud computing.

Cloud computing is a broad term for a range of technologies that shift computing tasks off companies' own in-house computers and onto those owned by technology vendors, accessed via the Internet and paid for on a utility basis. It is prompting an arms race among technology vendors.

In October, Microsoft launched Windows Azure, a web-based operating system that developers can use to build software for data centers.

Ozzie said that there was probably room only for a few players to be successful in the cloud computing market. Because of the need for costly, large scale data centers to process and store computing tasks, very few companies would be able to afford the investment necessary to get economies of scale.

"The level at which you need to build this out to serve enterprise deployments is substantial."


Источник: Total Telecom

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