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Microsoft Office 365 on pace to becoming billion dollar business

MCT/ AFR | May 3, 2013
Six months after the launch of Windows 8 and shortly after a quarterly earnings report that surprised some with its solidity, Microsoft watchers are asking: Is the company the slow-yet-steady tortoise that's gaining on the flashier hares of the business - the Googles and Apples? Or do the plunging PC market, lukewarm response to Windows 8, and still-minuscule presence in tablets and smartphones foretell an ominous future?

It's noteworthy that much of the speculation centres on these screens because they constitute the biggest changes Microsoft made in developing Windows 8. Those changes have been something of a lightning rod among critics of the new design.

The company is expected to make more announcements about Blue at Build, its annual conference for independent developers, happening this year in June.

Michael Yoshikami, chief executive of money-management firm Destination Wealth Management, says that "the rumours really swirl around: Are they going to be able to make it more user friendly, so it's less unfamiliar? In my view, they really don't have a choice. They're going to need to do that, given the rather tepid response by customers."

Even as the company's flagship Windows division stalls, though, its Business division, which includes cash cow Office, and Server and Tools continue to draw big bucks, thanks largely to corporate customers.

Their success also speaks to a return on the investment the company has made in growing its cloud services, including Office 365 and its Windows Azure cloud platform.

In April, Microsoft expanded its Windows Azure capabilities to compete even more directly with Amazon Web Services and said it would match Amazon's prices for services such as computing, storage and bandwidth.

Research firm Forrester called it a "bold move," saying "Microsoft hasn't just entered the public cloud market, it's kicked the door in."

It's an overdue move, according to IDC's Gillen. "Let's say Microsoft's doing the right things. I don't think they're doing it fast enough."


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