Microsoft's cloud computing push: Not good enough to beat Google

Microsoft just-announced plan for selling hosted online services such as email, Web meetings, and collaboration is a move in the right direction for the company. But it's not yet nearly good enough to fend off Google. Microsoft is going to have to deliver more, or it could ultimately face the loss of massive amounts of revenue.

The new offering, Microsoft Online Services, offers hosted versions of Exchange, Live Meeting, Sharepoint, and Microsoft CRM. Pay is on a per-seat basis, of course, and the services can be used by any sized business.

It's certainly a good first step away from the old Microsoft way of doing things, in which it sold software rather than services. The world is moving towards hosted services models, and Microsoft needs to be there.

The point, though, is not what's here but what isn't here. And that means Microsoft Office. You can't get Word, Excel, PowerPoint, or other Microsoft apps as services. In the long run, not offering them as services is a loser. Open Office is a great alternative to Microsoft Office, and it's free. Google Apps is free for individuals, and extremely low-cost for businesses. Google Apps isn't nearly as good as Open Office or Microsoft Office, but for many businesses, it could be good enough. And it's getting better all the time.

It's understandable that Microsoft is leery of offering Microsoft Office as a hosted service, because it could cannabalize its substantial Office revenue. But if Microsoft doesn't do the cannabilizing, someone else will, especially Google. Unless Microsoft eventually offers Office as a hosted service, it's facing trouble.

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