The Other Shoe Has Dropped: Microsoft Announces Microsoft Online

The other shoe has dropped. After hinting for about a year that it had a software and SaaS strategy, Microsoft today officially took the wraps off, issuing a press release. The product is called Microsoft Online, a SaaS-based set of solutions that were previously available only as software:

• Microsoft Communications Online (SaaS version of Microsoft Office Communications Server 2007)
• Microsoft Exchange Online (SaaS version of Microsoft Exchange Server 2007)
• Microsoft Office SharePoint Online (SaaS version of Microsoft Office SharePoint Server 2007)

Microsoft considers this IT-centric set of solutions different from its Live solutions, which are not IT-centric (i.e., end user or SMB-focused): Windows Live, Office Live, Dynamics Live CRM, MSN, Windows Live ID, and Xbox Live. Furthermore, Microsoft Online is targeted at the high end: companies with more than 5,000 employees. With Office Live targeted at businesses with 10 or fewer employees and Microsoft Online targeted at businesses with more than 5,000 employees, there's a pretty big gap in the middle. However, Microsoft (in the form of Jeff Raikes) hinted that the company will go after mid-sized businesses in the long run. My take is that  Microsoft has decided that after it's figured out how to serve both extremes of the market, handling the middle part will be a piece of cake.

Also announced are Microsoft Office Live Workspace, Microsoft Dynamics CRM Live (SaaS version of Microsoft Dynamics CRM), and Exchange Labs (R&D testing of messaging and unified communication). Office Live Workspace is a free collaboration workspace. As the beta signup states, "Store 1000+ Microsoft Office documents in one place; share files—you control who can view and edit; works with Word, Excel, PowerPoint and Outlook."

This is a huge announcement, with major ramifications in the market. Here are the "net it out" notes I jotted down after the pre-briefing by Raikes on September 27th:

• Microsoft is rolling out hosted versions of SharePoint, Exchange, OCS, and an Office Live Workspace.
• For companies with 5,000 users and up, but Microsoft said it will eventually go after mid-size businesses. Are working on both ends of the spectrum: small and large.
• This puts pressure on Cisco, Google, and Salesforce.com, and shuts down IBM.
• Office Live Workspace negates Google announcing that they’ve integrated JotSpot (whenever that happens--now 11 months after acquisition).
• Microsoft is still somewhat lacking on the social software side (weak wiki and blog, Knowledge Network not in GA, other vendors [e.g., Salesforce.com] are going after this).
• Now the SaaS vendors have lost the SaaS pricing advantage (pay as you go, no in-house hardware), and Microsoft gains the familiar UI advantage.
• Unclear what kind of sales credit Microsoft will give customers who have already purchased the software and now want to switch to the SaaS version. (Asked the question on LiveMeeting; Microsoft Analyst Relations will get back to me.)

Microsoft is currently being mum on pricing, so it's impossible to tell whether these offerings will undercut, match, or exceed the pricing of Google Apps, Premier Edition, Salesforce.com's recently announced Content Exchange, or other SaaS solutions. If the Microsoft offerings cost the same as or more than the other offerings, then we've just added another vendor for enterprises to look at.

However, if the Microsoft pricing undercuts the competition, it's a whole new ballgame.  Proponents of non-Microsoft SaaS solutions, rather than being perceived as harbingers of the next wave of IT (SaaS) and focused on saving the company money will now have to explain why they want to spend more money for less functionality.

Things at Cisco, Salesforce.com, and Google just got harder. Not impossible, but harder. It will be interesting to watch their reaction.

Comments

[Ted Stanton]

How is it you figure this "shuts down IBM" ???

[Guy Creese]

In reply to Ted's question, at this point, a number of IBM Lotus customers are migrating from Notes to SharePoint; I have yet to encounter anyone migrating from SharePoint to Notes. To add insult to injury, IBM has no SaaS-based collaboration and content strategy. So IBM currently has a losing software strategy and no SaaS strategy: what I would classify as being shut down in this highly competitive and volatile market.

[Ted Stanton]

Guy, first off, how are customer migrating their Notes email to Sharepoint. I could see migrating email to Exchange. Even still, the analyst reports are showing both in both directions with no clear winner. Secondly, please share how customers are migrating Notes applications to Sharepoint? What tools are they using?

[Guy Creese]

Yes, they're migrating e-mail to e-mail. I can't speak for other analysts, but I'm only seeing Notes to SharePoint. About a year ago IBM Analyst Relations stopped giving out installed base numbers for Notes, a typical move of Analyst Relations departments when the numbers are going down rather than up.

As far as migration, customers are using a variety of means. Tools from Casahl come up from time to time, as well as Microsoft's migration tools. In some cases enterprises keep Notes around for legacy apps but are using SharePoint going forward.

[Ted Stanton]

So your only referring to email. Your out-dated on any of your information about IBM giving out numbers. The most recent public numbers show that Notes has received double digit growth over the past 10 quarters with more then half the fortune 500 company's running Notes. See my latest blog entry and you might learn something.

Casahl - Looks like they provide tools for migrating Sharepoint/Exchange to Notes.

I have never heard of a single enterprise customer that has migrated Notes applications. Please share the public reference that shows a successful enterprise customer that migrated their applications?

I do appreciate your personal feedback, I'd just like to see some public numbers behind your thoughts and comments.

[Guy Creese]

The Casahl web site says: "MIGRATE collaborative applications to new platforms (for example, to or from Lotus Notes, Exchange public folders, SharePoint, SQL Server, or VS .NET)," so they also support migrating from Notes to SharePoint Exchange, not just migrating SharePoint Exchange to Notes, as you imply.

Since we're moving into a he said/she said mode, I have e-mailed IBM Analyst Relations to try and get the IBM version of the Notes numbers.

[Ted Stanton]

Can you also send me a link to Microsoft Analyst Relations as I would like to see their numbers as well :-)

[Ted Stanton]

And Gus, I work for IBM. My blog I refereed to above is an on an IBM website. The link in the blog is to an IBM webcast. The webcast is of an IBM Vice President sharing those numbers on Notes. Again, I suggest that you read my blog as those are IBM's version of Notes numbers!!