Last year, Steve Ballmer declared that Microsoft was “all in” with the cloud, but clarified that “the goal can’t be to throw out all the world’s software and start again.” Which makes sense. Microsoft brings in billions each year by serving the status quo. Given its near-monopoly in the software, services and operating system markets, change can only be a bad thing. With tomorrow’s launch of Office 365, Microsoft will show the world what “all in” looks like, and enter a playing field where it doesn’t enjoy its usual advantages.
In fact, Microsoft enters the cloud at a disadvantage. The web is a great equalizer when it comes to design, distribution and adoption of technology – customer success and constant innovation will trump massive ecosystems every time. “Born in the cloud” startups, which don’t have to break with old (and profitable) product lines and business models, offer a distinctly better value proposition for customers. Innovation is delivered immediately. Pay-as-you-go replaces complex licensing models, making it easy for customers to go directly to the buyer…and equally easy to leave if unsatisfied. Customers can mix-and-match tools, and can finally work from any location, on any device.
When going “cloud,” businesses are overwhelmingly managing their customer records on Salesforce, running their ERP on Netsuite, connecting on Yammer, emailing on Gmail, and sharing on Box. Ironically, Microsoft is now locked down by its couple decades of lock-in on the applications and servers markets. Historically, Microsoft's breed of innovation has been to leverage its scale to help standardize and consolidate a category on its own terms. It’s nearly always worked for them, so there hasn’t been a need to do things differently.
So we really have to give credit to Microsoft for making the leap into the cloud. This is a daring, albeit absolutely necessary, step for the Redmond giant. Microsoft is facing an uphill battle -- its economics, ecosystem and value propositions to customers are all going to change dramatically as it enters this uncharted territory. Beginning with Office 365.
Openness will make or break Office 365
With Office 365, Microsoft is counting on customers wanting technology in the cloud that’s comfortable and similar to what they’ve used in the past. Microsoft’s web offerings are going to look and feel like the Office, Outlook and SharePoint products that we’re already used to working with. But is that what customers really want when it comes to the next generation of technology in their organizations? If anything, we’re seeing businesses move away from familiarity and look for new, innovative ways to solve problems and enhance productivity. Applications that bake in social from the start, embrace mobility and openness, and provide an intuitive user experience are exploding in today’s businesses – and it’s not because they’re catering to the status quo.
So how does Microsoft compete in this new world? Perhaps the most critical factor to the success of Office 365 will be Microsoft’s willingness to open it up. The most transformative capability of the web – one that is often misunderstood by the old tech guard – is the enabling of a far more interconnected experience between applications. Any cloud solution that doesn’t take advantage of this will only see incremental gains. We can now integrate with any leading solution our customers are using, increasing both the value and stickiness of our own service. Today, Box connects to Salesforce, NetSuite, Jive and many others – and just last week, we announced an integration that brings Google Docs to our entire user base, helping to accelerate the fully-cloud workforce.
With Office 365, Microsoft has the opportunity to finally embrace openness and enable interoperability with “competing” services. Such a move would be far bolder than merely moving its existing product lines to a hosted environment. And based on historical precedent, it’s unlikely that Microsoft will take this course, at least at first. Microsoft lives in a world where it’s competing for share of wallet, not in a world where they want to encourage customers to connect to services outside its own portfolio. Case in point: Microsoft has over 100,000 employees, there are over 100 million iPhones on the market, and yet there’s a single iOS product from the Redmond conglomerate. Microsoft OneNote. This does not bode well for a company trying to go “all in” with a world that is quickly moving beyond its control.
At Box, we’ll remain hopefully that Microsoft will embrace the full powers of the cloud and unlock Office 365. We’d love to connect Box to their online office suite just as we have with Google Docs. Because at the end of the day, we want customers to have the opportunity to choose the solutions that work best for them. And we’re betting that those solutions will be open, mobile, and fundamentally simpler than ever before.