Microsoft, the vendor of the Outlook/Exchange e-mail platform, will be making a big change in their product and licensing models, in an effort to drive more revenue, but at a lower profit margin. I see this as a smart move on behalf of Microsoft because:
- Software-as-a-Service (SaaS) models are able to scale quicker, with the right management, and can be upgraded much quicker than traditional software installs. By having a platform that can update quicker, clients get more bang for their buck, and Microsoft can fine-tune their focus on improving the Outlook/Exchange products.
- Everyone who uses Outlook will be able to use features that are universal (and proprietary) with each other. I can imagine this swirling into corporate account file hosting as a start. People will no longer have to worry (or ignore) the differences from one server to another.
- Microsoft will be leveraging the Long Tail. By squeezing a tiered model with more customers or retaining the ones they have, they will be able to generate more revenue without hitting their client’s accounting departments. By forcing companies to purchase static licenses for static software; guess what, users don’t upgrade.
- More. Really, what Microsoft does with this change is anything they want with the permission from users. That is the power yielded with SaaS technologies.
Microsoft expects approximately 50% of their customers will switch to the SaaS model in the next five years (2013). This is a daring, but a good move in my opinion and should satisfy the needs of their corporate accounts.
However, I do believe Microsoft should make sure their Outlook-software users can still use the software solution, because of the habits people form around legacy software can be a huge obstacle for them in the move. The best compromise would be to offer legacy-connectivity for an additional fee, but let migration be cost-free.
