Will Microsoft’s first quarterly loss push them further toward Cloud Computing?


Microsoft isn’t a company that’s known for profit loss. In fact, their recent $492 million shortfall is by all accounts, the first actual deficit they’ve accrued in their 26 years as a company. People are beginning to wonder if this is demonstrative of some larger systemic issue, or if it’s simply an isolated incident.

When MS bought aQuantive, an online advertising company, in 2007, they probably had bigger things in mind that what’s actually transpired. According to official reports, it is this ad business which is chiefly responsible for the reported losses. The aQuantive purchase was apparently a strategic move made my Microsoft in an effort to compete with Google in search-related advertising. Needless to say, it appears that things didn’t work out too well for them.

Trying to go toe-to-toe with Google on its own turf (search engine technology and advertising) is a big gambit, no matter how you look at it. Still, you have to admire Microsoft’s drive, initiative and shrewdness; many corporations wouldn’t dare even approach the notion of trying to compete with Google.

Maybe it’s just another sign of the times? Nearly everywhere you look it seems that there is economic strife (often compounded with difficult climate-related issues tacked-on). Perhaps it was only a matter of time until Microsoft fell victim to the incredible turmoil in the markets? At any rate, they assure us that this is an isolated incident and not anything that’s poised to negatively affect their stock price or future plans.

One thing that is certain in the midst of all this uncertainty however is that Microsoft seems to be placing a great deal of emphasis on their cloud computing operations. Not only do MS have strategic positions in several key areas of the cloud vendor market, they are also eagerly developing a number of cloud-based technologies and pushing for a more cloud-centric approach across the board. For instance, Windows 8 is poised to be released soon; which is going to utilize cloud technology in ways that no other Windows OS has attempted before (or anyone for that matter).

This move toward placing more focus on cloud computing should also be a wake-up call for businesses of all shapes and sizes. The time to get prepared for cloud adoption and transition is now. As you may or may not be aware, one of the best ways to ensure that your business is capable of utilizing, managing and even improving upon your current or future cloud services is through professional development in the IT sector.  Microsoft on Cloud Computing

Simply put, any business with an IT department needs to be making sure that their personnel are both trained and certified in one or more cloud computing disciplines. Those that emphasize this type of education will find themselves positioned to take advantage of their capabilities and technological gains. Conversely, those businesses that are content to wait will face much more stringent competition and will have to deal with being constantly “out of the (technological) loop”.

Microsoft seems to be completely sold on the notion that cloud computing is not only here to stay, but that it is a type of infrastructure that should be used to replace virtually everything from networking and IT to stand-alone software and even physical hardware (through virtualization).

The stratagem it seems is to wane consumers off of receiving or expecting full software licensing purchases; their recent move to reshape Microsoft Office into a bona-fide cloud-based subscription service is clear evidence of that. Office is (and has historically been) Microsoft’s most popular product according to their own statistics. In other words, what they do with Office should be viewed as “very telling” of both their current and future business strategy actually is.

There’s simply no debating that this move toward redesigning their product line and shifting their focus toward cloud computing is indicative of some larger plan. After all, why break the status quo if you’re already a market leader?  Something tells me that they didn’t institute this kind of plan because they were bored – it is undoubtedly part of some much larger tactic which we will most likely soon discover. We already know that an MS Office-based subscription service would allow them to deliver some exciting new features to customers, but at the expense of regularly occurring subscription service costs of course.

What remains to be seen is how the average consumer is going to handle this notion of what amounts to “renting” their own software. If the public embraces this new notion, then MS will find themselves at the forefront of an entirely new set of profitable possibilities. However, if they falter here, it will be a sure sign that consumers are not willing to embrace the subscription concept in its current form and that it will require some type of dramatic revision.

But it should be noted that Microsoft has already experienced some notable successes in the cloud computing field. Perhaps MS perceives these triumphs (in the cloud market) to be indicative of some type of safe-haven which they can run to? From all outwardly appearances, this certainly seems to be the case.

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