Renewed Interest in Subscription Services

With growth slowing in its core businesses, top Microsoft executives say the company will make a new push into subscription services. Many of these services will be aimed at corporate customers, offering the features of a server application without the headaches of deployment and maintenance. This push will mean new competition for companies already providing hosted services and could take business from partners who provide consulting, support, integration, and other services. However, Microsoft has had difficulty creating successful hosted services in the past and may hesitate to move too quickly for fear of cannibalizing software sales.

Opportunities, Past and Future

Beginning around 2002, Microsoft backed away from subscription services. Executives emphasized software, not services, as Microsoft’s core business, and the company eliminated or scaled back many services, including the following:

• In summer 2005, Microsoft cancelled the Microsoft Business Network, which helped small and