Will Microsoft Online Services Cannibalize On-Premises Exchange, SharePoint?

Related to Microsoft launch of Online Services last Monday, eWeek published an article disussing the focus Microsoft has with the Online offering vs the current on-premise installed base. The message : competition and new ground and software + Services …

… Microsoft executive Chris Capossela denies that Microsoft Online Services such as Exchange Online and SharePoint Online will eat into the market share of Microsoft's traditional on-premises messaging and collaboration software suites. If this is true, it's good news for Microsoft as it moves deeper into cloud computing and SAAS to take on Google in Web services. …

The Analysts seem to be in agremeent on Microsoft’s focus:

… eWEEK asked analysts who follow the space closely whether Microsoft would eat up some of its own Exchange and SharePoint CAL and SA share.

Josh Greenbaum of Enterprise Applications Consulting said Capossela may have not mentioned Google because he knows Google is already taking share from Microsoft's classic on-premises business. He applauded Microsoft's Online Services move:

In a certain sense, this is a smart strategy for Microsoft to recapture some potential lost revenue and keep it in-house. It has the potential to be less remunerative in the short run but it's better than losing seats to the competition.

Sara Radicati, of the Radicati Group, had a different take. She noted that while Google Apps' pricing is attractive, there is a segment of the customer base looking for the same Exchange and SharePoint functionality they have today but at a lower cost of operation.

At $2 to $15 per user, per month for Exchange and/or SharePoint, Radicati said she believes Microsoft's Online Services are attractive. She added:

I don't think Microsoft is so much "cannibalizing" sales of its own on-premises software, rather I think the hosted option is essential for them to hold on to SMB [small and midsize business] customers that would be migrating to a hosted (or non-hosted) lower-cost option anyway. Basically these are customers they would have lost anyway from their on-premises software offerings, so this way they have a way of retaining them. ….

Software + Services is the focus. Where the early ‘incumbants’ of SaaS still want to make us all belive the browser and the cloud are the holy grail:

.. Finally, Capossela clung to what has been Microsoft's mantra the last few years: software plus services. More choice, he said, is the winning proposition.

Everyone knows the future lies in leveraging best of cloud and on-premises software. The vast majority of customers will live in a hybrid world, where they will mix and match, software plus services. What we have is very different from Google or anybody else in the market.

Take that, Google.

Source: Will Microsoft Online Services Cannibalize On-Premises Exchange, SharePoint?