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On-demand software is key, says Gates

Posted by iMark - 2005-11-10

Gates said in his e-mail that a forthcoming “services wave” will prove “disruptive”, and competitors will use it to challenge the company.

Microsoft launched a range of on-demand software initiatives last week, which covered web-based communications services for consumers and small businesses and on-demand business applications, including customer relationship management.

The leaked-memo-as-a-marketing-platform has been used by Microsoft in the past either to promote the musings of its chief or to highlight the way Microsoft aims to tackle key demands or issues in the market.

And on-demand software services is now a key issue for the company, with the likes of Google, Yahoo and others seemingly making a play for Microsoft’s desktop customers with their own on-demand offerings.

On-demand services allow users to benefit from applications without having to run large software programs on their desktops, while paying for software based on their usage rates.

A key issue for Microsoft is that many of its new-wave rivals, like Google, are giving this type of software away free. So Microsoft has to find a way to protect its existing business by potentially adopting other revenue models, which could include applications supported by on-line advertising, like some introduced by Yahoo and Google.

Gates’ e-mail followed another leaked e-mail to senior staff from Microsoft services chief Ray Ozzie, who is responsible for Microsoft’s on-demand development. He said Microsoft’s business was “at risk” if it didn’t do more to take advantage of online advertising and services.

But it isn’t all doom and gloom at Microsoft. In an uplifting conclusion, Gates tells staff “the opportunity for us to lead is very clear – more than any other company, we have the vision, assets, experience, and aspirations to deliver experiences and solutions across the entire range of digital scenarios, and to do so at a scale reaching users, developers and businesses across all markets.”

Details of the memos were reported in The Wall Street Journal.

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