Can Microsoft Dominate the Cloud?

Conventional wisdom held that cloud computing represented the greatest threat to Microsoft (Nasdaq: MSFT  ) . In theory, applications' increasing migration from your computer to far-off servers would threaten the relevance of Microsoft's Windows and cash-cow Office software.

However, even as the Fool and other observers typed up endless obituaries to the computing age that Microsoft dominated, Mr. Softy was assembling a strong, cohesive cloud-computing strategy. True, the company might not have a bead on consumer thinking the way Apple does. But cloud computing requires a massive data structure, computer-engineering knowhow, and the ability to market the end product to data centers. Microsoft can excel in all these areas.

At the Cowen & Co Technology Conference, Microsoft General Manager Doug Hauger discussed the company's cloud strategy. As shown at the conference, Microsoft's pushing into the cloud across almost every major product line.

Productivity: Microsoft's new Office suite has shifted to the Web in a big way, to challenge Google's (Nasdaq: GOOG  ) collection of productivity products. The company not only offers a free version of its software, but has also increased the Web compatibility of paid versions.

Communication and collaboration: The popular Exchange Server line has gotten the cloud treatment, allowing collaboration programs like Sharepoint and Live Meeting to be externally hosted. Microsoft hopes these changes will win more clients in the fast-growing collaboration market, which companies like Cisco (Nasdaq: CSCO  ) and IBM (NYSE: IBM  ) have been aggressively targeting.

Business apps: The company's quickly growing Dynamics line has moved online, to better position itself against Oracle (Nasdaq: ORCL  ) and cloud-computing first-mover salesforce.com (Nasdaq: CRM  ) .

Then there's the glue that holds Microsoft's online strategy together: Azure, a platform that allows developers to build, develop, and deploy applications. In this arena, Microsoft's greatest threat is Amazon.com's (Nasdaq: AMZN  ) Web Service platform.

Will the cloud-computing future rain riches upon Microsoft? Office's free version is a reaction to Google's own online products, and will probably lead to reduced sales. But other areas like business apps and collaboration could yield growth in the coming years, provided their cloud incarnations take share from larger competitors. Azure itself looks very promising, and should enjoy strong developer support. Whether or not Microsoft's cloud strategy takes off, you have to applaud the scope and aggressiveness of the company's offerings.

Microsoft fought long and hard for its dominance in the nation's IT departments. It'll take more than a couple of clouds on the horizon to dislodge the reigning champion.

For more information, see the full slideshow below:

Microsoft is a Motley Fool Inside Value recommendation. salesforce.com and Google are Motley Fool Rule Breakers picks. Apple and Amazon.com are Motley Fool Stock Advisor selections. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google and Oracle. Try any of our Foolish newsletter services free for 30 days.

Eric Bleeker doesn't own shares of companies listed above. The Motley Fool has a disclosure policy.


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