Microsoft anticipates to lose margins as “cloud” competitors begin to eat away at its core businesses.
Kudos to Microsoft for calling out the obvious. But the software maker 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 more massive 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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