Step 4: Win the Cloud Business War.
Sorry Microsoft, I am late in writing this. But what the heck its free advice, so a day late should not kill you.
So far, I have not talked about two de-investment areas and only one investment area. Here is another investment area. You need to win the Cloud Business War or at least a big part of it. So far the battle is pretty much all Salesforce.com. They are revenue and thought leaders with a great freaking CEO who pretty much founded the category. Amazon Web Services is rolling in their category and upstarts like Workday are also growing really fast. SAP, Oracle and IBM are buying cloud companies, but it is still a tiny part of their sprawling businesses.
Microsoft has some good assets here. After all, you run Bing and Hotmail/Outlook email services that are huge. Running massive data centres that crawl and house copies of the entire internet is really impressive. I think the scale and expertise you have here is second only to Google. You can capitalize on that knowledge and build massively scalable, multi-tenant business systems that will replace large scale on premise systems over the next ten years.
Microsoft has good enterprise DNA and can reach CIOs and LOB executives. Office 365 looks like it it generating good revenue and is a good place to start and expand from. Windows Azure also looks like a decent competitor. Lots of work to do, but you can be a leader in this category. I would also get out your checkbook on cloud based business startups. Acquisitions make sense. The big guys are not really acquirable, but there are lots of companies that are not overpriced that can be used to round out your portfolio.
One note of caution, you need to dump the notion of porting on premise software to limited multi-tenant architectures. You need to build true cloud based systems in order to get the long term economies of scale that real cloud based systems offer. the cloud based system should be complemented with mobile applications for iOS and Android. Existing cloud vendors are moving too slowly in this area and if you move quickly, you can lead in cloud/mobile business systems.
It's a great business and it not too late, but you need to invest quickly and aggressively.
Stay tuned for Step 5.
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