Microsoft Challenges Google Up in the ‘Clouds’

Just when we thought Apple has an edge up in the clouds, Microsoft has decided to fly up in the heavens and has moved into cloud computing as markets for this technology continue to expand.

Microsoft revamped its Office applications, which is its most profitable application, and made it into an online format. The Office applications format includes Outlook email, Excel spreadsheets and SharePoint collaboration tools. Microsoft has offered online versions of some Office programs – chiefly Outlook – for its corporate customers for several years, and last year rolled out free versions for individual home users.

Microsoft is challenging Google after the latter stole a small percentage of the former’s corporate customers. Google has done so when it offered cheaper and web-only alternatives which removed the time companies needed when installing software or managing servers. Microsoft, like Google, will host users’ data remotely, and maintain all the servers in vast data centers. Unlike Google, it will also allow companies to put their data on dedicated servers if they choose, or keep the data on their own premises.

Because of Microsoft’s move into cloud computing, its shares rose 3.7 percent on Monday which is considered the largest gain it had since September. The gains are attributed to hopes that Microsoft can boost profits after it decided to join in the growing cloud sector.

The web-based software services market is gaining prominence as more and more users, from companies to government offices and local authorities are getting into cloud computing technology thanks to Microsoft’s and Google’s pitching efforts. The heat is on for the two giants.

It’s a new challenge for Microsoft who intends to make smaller margins from web-based applications. It must be noted that web-based applications are much cheaper than keeping servers and when one considers the cost of data management. Microsoft’s strategy is to get a larger slice of the pie of companies’ technology budget.

Last October, Microsoft rolled out a test version of the new service and said it planned to charge from $2 per user per month for basic email services to $27 per user per month for advanced offerings. This is relatively cheaper when compared to what Google charges – a flat fee of $50 per user per year for its web-based Google Apps product.

Steve Ballmer, Chief Executive of Microsoft, will be in New York City Tuesday morning to showcase Microsoft’s online focus to present the company’s new and updated set of offerings. The updated offering is called Office 365. The launch is expected to heat up the competition between Microsoft and Google.

Microsoft built itself up on expensive versions of software installed on individual computers. This strategy turned the Office unit into Microsoft’s most profitable, earning more than $3 billion alone last quarter.