News (eg: BBC article Microsoft hails ‘strategic shift’) that Microsoft is going to push into online services marks "a revolution," according to Bill Gates, in how the company thinks about software. It is perhaps also a belated acceptance of the challenge posed by application service provider (ASP) businesses such as Salesforce.com who have rejected the sale of "shrink-wrapped" software in favour of services delivered via the internet.
It will be a major challenge for a business hitherto dominated by the need to sell software to be installed on users’ computers, and the licensing of its software to corporate customers. It will mean changing the Microsoft mindset from shifting product towards providing a service – what Gates calls a ‘service plus software’ mentality.
Competitors have been dismissive of Microsoft’s move. I liked the comments from Salesforce’s Marc Benioff: "With ‘Live’ appended to some familiar names: Windows Live, Microsoft Office Live, Windows Live Messenger and so on, the clear implication is that their current product line should be renamed with similar zeal: Windows Dead, Microsoft Office Dead, and Windows Messenger Dead," Mr Benioff said.
However, the move should not be dismissed so lightly. Microsoft commands a large following and when a major player makes a strategic shift like this, others will be influenced into following suit. Also, this development will hopefully encourage wider acceptance of web services, and make it a little easier for existing web services providers to convince sceptical clients to embrace ASP technologies. And the construction collaboration technology ASPs, for example, can at least congratulate themselves on going to market with the concept some years before Microsoft finally admitted that the future lay via the internet, not on the desktop hard-drive or internal server.