Microsoft can be maddeningly slow when it comes to jumping on
business technology trends -- witness its glacial response to
tablets. But in cloud-based collaboration, Microsoft's actions,
such as its just announced deal to acquire online video and voice
communication provider Skype, suggest it has the right sense of
urgency.
By laying out USD 8.5 billion for Skype--a company eBay paid USD
2.6 billion for in 2005, then sold a 65 percent stake to a private
equity group led by Silver Lake at a valuation of USD 2.75 billion
in 2009--Microsoft is sparing no expense to augment its already
formidable collaboration arsenal, which includes Exchange email,
SharePoint platform, and its Lync instant messaging, video
conferencing, and online meeting. Microsoft holds the clear market
lead in enterprise collaboration software, and if it squanders that
lead, it has only itself to blame.
CIOs en masse want out of the business of running email systems.
They’re considering new cloud-based alternatives, including
Google Apps, which combines online email, word processing,
spreadsheet, and other apps. Even CIOs in highly regulated,
security-conscious, control-oriented industries are exploring cloud
options, even if they're wary of making the leap.
But with Exchange and SharePoint, which has become the center of
thousands of companies' ad hoc collaboration, including web pages
devoted to document-sharing around projects, Microsoft is well
entrenched. And it has moved steadily into the cloud, first with
its BPOS suite of online Exhange and SharePoint, and soon with its
more expansive Office 365. One selling point for Microsoft is that
companies know that if they become dissatisfied with Microsoft as a
service provider, they can switch to running Exchange and
SharePoint in a third-party data center, or in their own data
center (though after some painful transition effort and cost).
At the same time as this cloud shift is happening, employees are
demanding more from their collaboration platforms, and they aren't
waiting around for the IT department to give them what they need.
Microsoft has its own voice-over-IP and video offerings, but Skype
fills a hole in Microsoft's collaboration lineup in terms of
easy-to-use voice and video used on a massive scale. Skype claims
more than 100 million users, and it lets people make a video
connection with anyone who has downloaded Skype--such as a supplier
who isn't on the company's video network, or your kids back home
while you're traveling.
Microsoft CEO Steve Ballmer made clear that this bridge Skype
offers between personal and business lives is a major asset.
"Enterprises want a level of control, but on the other hand people
want to talk to partners and suppliers outside the four walls of
their company, and with their family and friends," Ballmer said
during a press conference.
In today's market, if a company's IT team doesn't meet a
collaboration need, employees will just go get what they need on
the Web, whether it’s Skype or some other free service.
Microsoft's challenge in the enterprise will be to keep that
freedom that people expect from Skype, while giving companies that
control they feel they need.
Jason Maynard, an equity analyst for Wells Fargo (and an
InformationWeek editorial advisory board member), said in a
research note early this morning that the Skype deal should help
Microsoft in its competition with Apple and Google, whose more
consumer-centric collaboration tools are showing up in a lot of
offices. Writes Maynard:
"We like the potential of this transaction as it brings Microsoft a
very strategic enabling technology that could help its Windows
Mobile platform, improve its collaboration positioning, and
ultimately be their way forward for video and voice communications
on the web. From a competitive standpoint, it gives Microsoft an
answer to Google's Google Voice service and Apple's Facetime
platform. The WSJ has reported that both Google and Facebook were
potential suitors for Skype. Given Microsoft's investment and cozy
partnership with Facebook, we think it would make incredible sense
for the two firms to collaborate in the communications arena."
One year ago, Microsoft CEO Steve Ballmer told InformationWeek
editors that the company was seeing a "hockey stick" growth mode
for cloud computing, particularly when it came to adoption of
collaboration apps. Ballmer said that moving to the cloud would
mark a change to Microsoft's business model: It would provide more
services to customers, even as it earned lower profit margins than
it had on licensed software.
The Skype deal shows Ballmer acting on those beliefs. Microsoft is
playing from behind in a number of vital markets. Not in enterprise
collaboration. It will face plenty of tough competitors, but its
Microsoft's game to lose.