Microsoft's Cloud Strategy Relies on Partners
It’s no secret that Microsoft faces a host of challenges as it attempts to shift its focus from the traditional and desktop-bound to a more cloud-centric, mobile-focused model. For companies with tens of thousands of employees and decades’ worth of institutional memory, recoding the corporate DNA to meet new challenges is an undertaking with a lot of risk, and a high potential for failure.
Given its size and cash flow, as well as the solidity of its traditional product lines, such as Windows and Office, Microsoft could have walked that path to the cloud and mobile alone. Instead, the company seems determined to join in massive, broad-based partnerships with other tech giants—saving it some cash and effort, but also placing some part of its fate in the hands of those companies’ ability to execute.
It started, in many ways, with Yahoo. After trying—and failing—to buy the Web portal company for $44.6 billion, Microsoft took a different approach in the summer of 2009, inking a 10-year deal in which Microsoft’s Bing search engine would power Yahoo’s back-end search. The two companies expect all Yahoo customers and partners to move to Bing by 2012, provided the integration itself continues to proceed smoothly.
According to analytics firm comScore, Bing owns 13.6 percent of the search-engine market, versus Google, with 65.4 percent. When you combine Bing’s share with Yahoo’s 16.1 percent stake, then Microsoft’s total market share rises to 29.7 percent. While those numbers don’t exactly pose an existential threat to Google, they solidly refute some pundits’ early expectations that Bing would die a quick and messy death soon after its rollout in summer 2009.
The Yahoo deal also allowed Microsoft to gain many of the benefits of an outright merger at a fraction of the cost.
Perhaps encouraged by that development, Microsoft moved to enact a partnership with another massive player in the tech space: Nokia. Under the reported terms of the agreement between the two companies, Microsoft will pay the Finnish manufacturer some $1 billion over five years to manufacture handsets running Windows Phone 7. In return, Nokia will apparently pay Microsoft a licensing fee for every copy of Windows Phone 7 installed on a smartphone.
For more, read the eWEEK article: Microsoft's Cloud and Mobile Strategy: Partner With Everyone.