Here is a Forbes article
Microsoft Chief Executive Steve Ballmer put online services at the center of the software giant’s strategy in a meeting with financial analysts Monday, making a forceful case for the $44.6 billion bid for Yahoo! that the software giant unveiled Friday.
Underscoring the importance of the deal, Chief Financial Officer Chris Liddell said that in addition to dipping into its deep pile of cash, Microsoft (nasdaq: MSFT – news – people ) will borrow money for the first time to make the deal happen.
Ballmer said the shift to online software and services will mean changes for all of Microsoft’s businesses, which range from desktop productivity tools to database and e-mail server software. “Each and every one of our businesses transition to have additional revenue and profit opportunities based on this transition,” Ballmer said, speaking at a regularly scheduled strategic update for analysts following the company. “If someone is going to cannibalize us, better that we cannibalize ourselves.”
Microsoft wants to offer its software as an online service, a growing trend and they want in on it. This is a bad move on their part in the long run. MS software was accepted by the people because it liberated them from the reliance on their tech support. They wanted access to computing that was free from any interference from the tech support bosses. People were willing to put up with all kind of aggravation that buggy MS software caused but the users stayed loyal to MS because they had full control of their PC there was no enterprise management of PCs because the enterprise thought PC’s were not interesting enough to warrant their attention. They pretty much left the PC’s alone till the Internet came and PC had to get connected through the enterprise network.
The big computer companies always loved selling thin clients and bid servers while IT staff could not get enough of it. PCs created a totally different paradigm where it was the end user who had the control of his computing environment and needs. That is what made MS powerful with a dedicated user base who will not give up their PCs and who abandoned mainframe computing in favor of PC based computing environment. Microsoft supporting thin client fat server computing will be the endorsement of what Sun,HP and IBM wanted for such a long time. Microsoft basically abandoning their own turf and trying to move into the computing territory they are not strong.
I think it is time that Microsoft should lead again by supporting peer-to peer networking. It fits well into empowering the PC computing and taking the wind out of thin client and fat server computing. They have all the major pieces already in place. They bought Groove a p2p based program that supports small group collaboration and they made it part of Office suite. They hired the chief architect of Groove Ray Ozzie who has extensive lifelong experience in designing collaborative software since the days of Lotus notes. Now all they have to do is create web 3.0 application that enables people to create their own collaborative environments using their PCs. No need to run a web server or application servers. No extra infrastructure investment. The PC becomes the client for some services and provider of some services to others empowering the PC owners with network centric computing.
The next wave of computing is about designing safe user friendly virtual collaborative environments in which a group of people can accomplish some useful work. That is why the social computing web sites such as MySpace and facebook are all rage because they allow people to interact. Microsoft has all the pieces of puzzle all they need is to put it together.
The Microsoft became powerful by adding value to PC platform. By endorsing client/server computing I think they are getting away from their roots. They will loose big time because they can not compete with the free software such as Docs from Google on the Google’s turf.