Microsoft is planning to release the next version of its Office suite, 2010, as a cloud-based instance for the first time. This will include the option of an on-line subscription service as well as traditional purchasing of software licences for business use.
Our View: Ultimately this will affect Microsoft’s pricing policy, with much tighter margins for vendors coming from cloud-based applications, so numbers will be important. Microsoft has the advantage of market dominance in traditional desktop software, so is helped by familiarity with the product, but this is being challenged by the move into a freer cloud environment.
However this affects Microsoft, the increased competition should prove to be beneficial for cloud services customers, with the opportunity to reduce desktop software costs via cloud subscriptions.