Tuesday, March 2, 2010

Microsoft to Make Web-Based Programs a Billion-Dollar Business, Elop Says‏


Microsoft Aims for $1 Billion in Web-Program Sales

Microsoft Corp.’s business-software unit expects to get at least $1 billion from Web versions of its Office and e-mail programs in the next three to five years, said Stephen Elop, head of the division.

Over that period, Microsoft predicts about half its customers for e-mail and collaboration software will switch to so-called cloud versions of the programs, which are stored and run from Microsoft’s server farms.

“Three years, five years, is it a billion-dollar business? I’m quite certain it will be,” Elop said in an interview on Bloomberg Television. “Because so much of what we’re doing is focused on this particular area, we’re seeing very large customers making large commitments in this direction. You’ll see it grow rapidly.”

The rising revenue will mean Microsoft can increase profit at the unit, Microsoft’s largest, even as analysts predict margins will narrow, Elop said. The company is readying its first Web-based versions of word-processing and spreadsheet software to match Google Inc., which is trying to steal Microsoft’s corporate customers and win over consumers.

Redmond, Washington-based Microsoft is also pushing cloud versions of its Exchange e-mail program and SharePoint, which allows employees to work together on projects and set up corporate Web sites.

Microsoft wants to use that software to lure users away from International Business Machines Corp. More than half of customers for these Microsoft programs are switching from IBM’s Lotus, Novell Inc.’s GroupWise and other competitors, said Microsoft Vice President Ron Markezich in an interview this week.

Microsoft rose 7 cents to $28.67 at 4 p.m. New York time on the Nasdaq Stock Market. After gaining 57 percent last year, the shares have lost 5.9 percent in 2010.