Is this the Tipping Point from on-premise software to software as a service? On the same week Microsoft announced a 32% drop in profits Apple reported sky rocketing profits. Still the Redmond giant has a long way to fall. It makes a cool $1b Nett profit every single day! However, this is a striking contrast in fortunes during a recession. The downturn is acting as a catalyst of change and speeding up the Big Switch to cloud software services. The way we access and use technology applications is changing.
At the heart of Apple’s iPhone success is the App Store and iTunes. Apple is successfully up-ending how music is distributed and how mobile phones are used. Microsoft’s poor financial results also follows the closing down of Microsoft Encarta last month. Microsoft gave up the fight because its traditional software could no longer compete with the likes of Wikipedia. The good and bad news keeps coming thick and fast. Only two months ago the SaaS CRM provider Salesforce.com reported a 34% increased in revenues and broke the philological $1b revenue barrier.
Its far too early to write Microsoft off but can the giant keep up with the increasing rate of change? Microsoft has rarely lead from the front but they have turned around and court up in the past. Microsoft’s response to the Cloud Computing Big Switch is Azure. The challenge for Microsoft will be to move away from its reliance on software licence revenues to a service based model. I’m not entirely sure they will be able to pull this one off..