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Microsoft Broadens Cloud Appeal

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As enterprises look to Software-as-a-Service (SaaS) to help cut costs, Microsoft is looking to strengthen its hand in the market, rolling out new hosted applications and greater access to existing cloud-based offerings at the CeBIT 2009 trade show in Hanover, Germany.

The software giant rounded out its online productivity offerings, putting it once again in direct competition with perennial rivals.

For starters, Microsoft is expanding access to its Business Productivity Online Suite, which consists of hosted versions of Exchange, SharePoint, Office Live Meeting and Office Communications Server. The suite has been available for purchase to U.S. customers since November, but beginning in April, it will become available to businesses in 19 additional nations, including Japan and the United Kingdom.

Today also marks the debut of the Business Productivity Online Deskless Worker Suite, which consists of lightweight versions of Microsoft SharePoint and Exchange. Microsoft is aiming the suite at businesses with users who lack access to e-mail or collaboration tools, Kelly said.

“Corporations want to communicate with all their workers by e-mail, but up to now, it has been too expensive,” he said.

The announcements ramp up the battle for cloud-based productivity software, putting Microsoft in a head-to-head battle against rivals like IBM and Google. Earlier this year, IBM unveiled its LotusLive portfolio of social networking and collaboration services, while Google continues pressing hard with its Google Apps Premier Edition.

“Microsoft must protect the substantial lead it enjoys in the collaboration space and, as the competition shifts to the Web, it must defend its turf there,” Gartner analyst Matt Cain told in an e-mail.

The world’s largest software company also will be taking on Cisco, which Cain said would later this year begin offering a hosted combination of its WebEx online meeting and Web conferencing product, its Postpath e-mail server and the Jabber open source enterprise instant messaging product.

Such efforts aim to take advantage of businesses growing consideration of SaaS and cloud computing-based solutions as ways to cut costs — a factor that industry observers say will make SaaS one of the few strong IT areas in 2009.

Echoing arguments made by SaaS advocates like chairman and CEO Marc Benioff on the strengths of the model, Microsoft’s Kelly said businesses will flock to his company’s Online services because of SaaS’s benefits over traditional software.

For instance, Kelly said SaaS enables enterprises to shift spending from capital expenditures to operating expenditures and free up IT staff from spending time on maintenance and upgrades.

“We see this as a major initiative within Microsoft and believe that, within five years, 50 percent of Exchange and SharePoint will be online,” Eron Kelly, senior director of Microsoft’s Business Online Services Group, told

However, Gartner’s Cain was not so sure.

“We would expect they’ll achieve 20 to 30 percent, and that will come from converting existing Exchange deployments on the brink of having to do a version upgrade, competitive wins from Novell and IBM, ‘and’ expansion of current accounts currently without e-mail,” he said.

Cain added that Microsoft will likely offer credits for Online products to customers with on-premise software licenses they had purchased previously, he said.

Although he does not believe Microsoft will meet its expectations for its Online products, Cain sees the company succeeding in the arena.

“Microsoft is likely to be the leading vendor in this space for the foreseeable future,” he said.

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