Microsoft is shifting its strategy away from pitching itself as a company that can offer companies a choice of software or hosted services, toward pushing the cloud, an executive said on Thursday at the software giant's annual financial analyst meeting.
A year ago, Microsoft was telling customers that the company is uniquely positioned because it offers a choice of on-premise or cloud-based service, said Kevin Turner, chief operating officer for Microsoft.
"We've changed that. I don't think that was a good move. We're going to lead with the cloud," he said.
Still, while its message to customers may change, the company still expects to sell both software and hosted software.
"Leading with the cloud helps better position Microsoft to sell more on-premise products than ever before," he said.
Microsoft is also doing some "hand holding" to help customers work out implications of the cloud on budgeting. "It's a shift from capex to opex," Turner noted.
The company is also showing companies that they can more easily move to the most recent software by using the cloud, he said. Cloud services "allow us to take that burden off our customers and they are more than willing to give that to us," he said.
Its approach is paying off, he said. Seventy percent of deals for cloud services at Microsoft during its fourth quarter were new customers, Turner said. Those companies were switching from IBM Lotus Notes or other competitive products, he said.
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The question si with their late start can they catch up with Google. Microsoft has a large base of enterprise customers who are used to using and are comfortable with Microsoft products. This base of customers will make them very competitive in the world of cloud computing.
John H. Armwood
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