Software Plus Services Becomes Urgent

Establishing a services business has been a public priority for Microsoft since 2005, but its efforts to do so have been largely experimental. The shift to services has taken on more urgency, however: company executives told attendees at Microsoft’s 2007 annual partner conference (held in Denver, CO) that the company’s top long-term priority is to move to computing models that rely heavily on online services-and if Microsoft doesn’t move quickly, it “will become obsolete.” However, other than promising partners commissions for referrals to its services, the company offered little in the way of business models for services partners.

Fundamental Transformation Affects All

In Microsoft’s “software plus services” vision, customers will employ both locally installed software and hardware resources as well as Internet-based resources, but Ballmer acknowledged that much about the vision is uncertain. Nevertheless, he predicted that the company would be delivering some key parts of the vision within two years. (For a diagram of the components that Ballmer indicated would be built, see the illustration “The Software Plus Services Architecture“.”)