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The Microsoft and Google SaaS Conundrum

Both Microsoft and Google are challenged in figuring out ways to manage, and profit from the looming move by a lot of business to a lot more hosted applications, and a lot less on-premise infrastructure. It’s undeniable this is the way forward (at SADA, we have term for this, something we’ve been working on for 3 years, called ZEROi – or Zero Infrastructure – computing delivered like electricity). The industry is changing – rapidly – so look sharp!

So, here is how things are stacking up:

  1. Build/maintain channel:
    1. Google: needs to build a channel, a more formal program, and figure out ways for their partners to be paid not only in implementation services, but in ‘reselling’ hosted services.
    2. Microsoft: needs to build out a brand new channel strategy which won’t cannibalize the traditional channel they have had for years.
  2. Hosting/infrastructure strategy:
    1. Google: has always hosted applications in-house. Results in greater peace of mind for customers. Google doesn’t go down, and regardless of which partner helps them get on-board, they know their data is with Google. Google is not going to go out of business.
    2. Microsoft: up until recently, developed an SaaS strategy which said “MS Partners could build server farms, and charge customers for hosting and SaaS”. At first glance, good for partners. But only large partners can build out hosting infrastructure, and even then, Microsoft is not the protector of that data – the partner is. The partner is more likely to go out of business than Microsoft. Changing their tune to say that now MS will host – threatens Channel.
  3. On-premise requirements for customers:
    1. Google: got an internet connection? Good. Oh, you had a bunch of Dell servers and Microsoft software before? So what? Got a thin client? A $200 linux desktop for your employess? That’ll do.
    2. Microsoft: Wait, you mean if you adopt my SaaS, you’ll need much less hardware and software licensing? Wow… but that’s where most of my revenue is generated from, and it’s what my Partners make money at installing. You don’t need lots of processing power, OR Vista to run web applications…. Oh yea, it’s also why traditionally Intel loves us, and we love them. Our more complex, multi-server deployment methodologies require lots and lots of processing power. You mean you won’t need that any more?
  4. Platform:
    1. Google: platform independent, doesn’t care about the end-point. They know the OS is not going to matter.
    2. Microsoft: surprise! Still likes IE better than Firefox, and Windows better than anything else. They are moving towards platform independence, but it hurts so baaad! Admitting the OS doesn’t matter seems contradictory, and can cost Billions.
  5. Tools:
    1. Google: tools not as rich as MS, though purely web-based, and build from the ground up to be all about collaboration and content, not pretty fonts. Knows the way people work is changing. It takes 2 steps to make my presentation made with Presently embed in my Blog or website.
    2. Microsoft: more familiar looking tools, but continues to want to make people buy MS Office, which is a cash-cow. Doesn’t yet realize that most people don’t use 80% of the features of Word 2007. Try to embed your Powerpoint into your Blog…
  6. Extensibility:
    1. Google: API’s don’t care what you use – Java, .NET, Python, PHP (okay, so there is a slight bias towards Python….). Highly extensible, and customizable, with more API’s being released all the time.
    2. Microsoft: Have to use .NET and Visual Studio. And have you looked at the Office SDK? Geez…
  7. Biggest risks:
    1. Google: Apps is seen as a fad, and never adopted by portions of the Fortune 500. Though even then, the SMB could still be a huge paying customer for Apps. Also, they could fail to build a solid channel, and make partners upset by moves like the recent one – offering Postini direct to customers at less than Postini partners buy the product. Ouch.
    2. Microsoft: Destroys channel AND it’s own source of revenue by incorrectly bringing SaaS to market. But there are some very very smart people at MS – so let’s not count them out.


The story is just unraveling, and it’s going to get very, very interesting. Check out this article by eWeek.

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