Bringing down software margins with the cloud and open source
Posted by: admin in Business and PoliticsMicrosoft expects to lose margin as “cloud” competitors begin to eat away at its core businesses. Kudos to Microsoft for calling out the obvious. But Microsoft still has a lot to learn if it thinks it can charge more under its own cloud model because “the customer will pay Microsoft a larger fee, since Microsoft also runs and maintains all the hardware,” as Nick Carr notes:
Capossela’s assumption that Microsoft will be able to charge companies more under the cloud model seems optimistic, given the different economics of providing software as a web service and the aggressive pricing strategies of cloud pioneers like Google, Zoho, and Amazon.
Put more bluntly, there’s not a chance in Hades that Microsoft will be able to charge more for its cloud-based offerings, not when its competitors are using the cloud to pummel its desktop and server-based offerings. This is something that Microsoft (and everyone else) is simply going to have to get used to: The go-go days of outrageous (software) margins are over. Done.
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