We think cloud computing is a disruptive technology that threatens Microsoft’s core PC and enterprise software business and that Google (GOOG), Salesforce.com (CRM), etc., will therefore be a problem for Microsoft in more areas than online advertising. Microsoft (MSFT) vehemently disagrees.
In fact, Microsoft has long maintained, Microsoft will soon be offering enterprise customers cloud-based hosted services such as Exchange Online and these solutions will stop customers from defecting to Google, Salesforce, NetSuite (N), et al. Microsoft expects half of its customers to migrate to these solutions over the next 5 years.
So far, Microsoft’s cloud solutions have largely been vapor, especially online-based versions of Word and Excel, but Office manager Chris Capossela told Reuters today that Coca Cola Enterprises (CCE) recently shifted 70,000 seats from Lotus Domino to Exchange Online. This is certainly a step in the right direction.
Importantly, Capossela added that Exchange Online is less profitable per dollar of revenue than Microsoft’s current software-based model, but that the price per seat is higher, resulting in higher revenue. Exchange Online also requires an enormous (and un-Microsoft-like) investment in infrastructure, as Microsoft builds out its data centre capacity. We don’t yet know the pricing and business-model impact details, but they will obviously be critical.
We still have a lot of work to do here, but Microsoft’s ability to transition to cloud-based services while preserving its profit growth is crucial for the future of the company and the stock. As a result, we’d be grateful if anyone can shed light on the following:
- Cost difference between Exchange Online pricing and typical Exchange pricing.
- Cost difference between Exchange Online and Google Apps (specifically, corporate Gmail)
- Any examples of organisations that have shifted from Exchange to Gmail