Is Microsoft whistling past the software graveyard?

It sounds like denial: Microsoft's new cloud chief says cloud computing won't hurt the software giant

After taking over for Microsoft's Bob Muglia, Microsoft's new cloud chief, Satya Nadella, says the cloud is a "sales opportunity" for Microsoft, not a threat. He claims the cloud will not hurt Microsoft, and the company will be able to hold onto its existing market share and dominance on the PC, while at the same time gaining a larger and larger share of the emerging cloud computing market.

Let's check the logic here.

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Let's say you're a huge software company that sells through thousands and thousands of channels. Your products include operating systems, office automation software, enterprise software, and development tools. Moreover, you charge a lot of money because you can. After all, you're a leader in those markets.

Now, you're looking to provide most of that same technology through the public cloud, which bypasses your established channels, and you can no longer charge the same premium. I'm talking Windows Azure and Office 365. Furthermore, you're a follower and not a leader in the still-emerging cloud computing marketplace.

Despite Nadella's optimism, this sounds like a bag of hurt to me.

The fact is, all large software providers moving their software services to cloud services will ultimately hinder their own sales process and perhaps cannibalize their own market base. It can't be avoided.

That's why Oracle, IBM, and Hewlett-Packard have not played up any public cloud offering, and instead opt to push the local data-center-centric private cloud options. They see the public cloud pushing down their traditional software business, as white-belted salesmen roaming enterprise halls are quickly replaced with Web browsers.

In many respects, Microsoft is actually being much more proactive than its counterparts, building out a public cloud service despite the certainty it will see some initial rough waters. However, "no pain"? Sorry, but this is going to hurt a lot.

This article, "Is Microsoft whistling past the software graveyard?," originally appeared at Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at For the latest business technology news, follow on Twitter.

Copyright © 2011 IDG Communications, Inc.

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