Microsoft’s services: More marketing than meat

It’s official: Microsoft wants you to know it’s serious about this whole hosted software thing. Today they will articulate a long-overdue roadmap for “software plus services” — a hybrid approach that embraces both old-school boxed software and the flavor-of-the-month hosted services model.

The announcement itself has the trappings of a big deal. In fact, it’s more a case of rearranging the furniture and adding a light coat of paint. Specifically, all MS services will be divided into two distinct families: Live (for consumers and SMB) and Online (for enterprises and business that require high availability, scalability, security, etc.).

So we’re mostly talking about a rebranding here. The services now designated as part of Online — Microsoft Exchange Online, Microsoft Office SharePoint Online, Microsoft Office Communications Online — already exist elsewhere in the MS hierarchy. As before, they’re available as conventional software on premises or as a software-as-a-service offering hosted either by Microsoft or a Microsoft partner.

The Live family announcement is made a bit more exciting because it includes a new product: Office Live Workspace, a personal storage and collaborative environment in the cloud. You can store anything for free, but document collaboration works only with Office documents. Preregistration starts today at the Office Live site.

The company also announced Exchange Labs, an R&D effort that will supply Exchange as a hosted service to universities and other large facilities that want to innovate around Exchange. And they’re launching a new version of Microsoft Dynamics CRM (code name Titan) to a limited number of customers. In keeping with Microsoft’s strategy, Titan can be run on premise or hosted. Significantly, the next-gen Dynamics CRM is multitenanted, an architectural approach that is essential for real, robust SaaS. Many other Microsoft service offerings don’t support multitenancy.

For all the elements in this announcement, it’s hard to generate much enthusiasm. Microsoft’s big splash feels more like a little ripple — a dutiful set of launches and marketing moves designed mostly to prove that MS “gets it.” Plus, Microsoft’s insistence on keeping one foot firmly planted in the boxed software world (remember, it’s “software plus services”) indicates their embrace of Web 2.0 is fairly tepid.

Still, if Microsoft was slow to grasp the importance of the Internet, they’d like to prove they aren’t asleep at the switch when it comes to SaaS and Web 2.0. Office Live Workspace may be a key piece of the puzzle here, but Microsoft is undoubtedly late to the party. Google has been making hay with its hosted suite, and other competitors are springing up all over the place.

Don’t forget, though, that Microsoft has a built in advantage: a massive installed base of MS Office. A wholesale move to hosted services would undercut that still lucrative business. Despite the Web 2.0 enthusiasts and cockeyed optimists who are penning obituaries for conventional, non-browser-based software, Office isn’t in any danger of going away anytime soon. Software plus services is really a play to hold the line and maintain the status quo, even as it seems Microsoft is embracing the newest software models. Smart, very smart.