Today was not just the day when Windows 7 hit the "Release To Manufacturing" button and started its final run-down before availability to Microsoft's community on July 24th, 2009 [by accident, on the same date GlobalFoundries will break ground of Fab 2 facility in New York state].
Microsoft is hosting its traditional Worldwide Partner Conference event in New Orleans, Louisiana. As we suspected, the company also unveiled online components such as Office 2010 Web Applications and its Mobile 2010 strategy. This is all part of the plan to stop the online gargaunts such as Google and rising stars such as Zoho, but as such, it was bound to produce a reaction by its competition.
We received a statement from Mr. Sridhar Vembu, CEO of Zoho Corporation http://blogs.zoho.com/
, and we're publishing it in full: "Today, Microsoft finally unveiled (with a generous definition of "unveiled") its Office 2010 product, along with the anticipated web 'components'. What do we think? First, at Zoho, we have always considered Microsoft to be the one to beat. To paraphrase Gates himself, we have always viewed both Zoho and Google as stealing Microsoft's customer base. After all, they own 90+% of the office market today, which is why we have always viewed the real competition (for both Zoho and Google) to be Microsoft. Having said that, what we see here is more evidence of Microsoft's strategic muddle: how far do they want to go with their online offerings? They clearly recognize the risk — almost $16 billion in revenue (and almost the same in gross profit) is involved here, one of the largest franchises of software. We do not believe the $16 billion in revenue/profit is defensible, but our guess is that Steve Ballmer does not want to be the CEO who gives that news to shareholders. Not when the other multi-billion franchise is also looking a bit wobbly. Therein lies the fundamental dilemma for Microsoft and the fundamental opportunity for players like Zoho. What are considered crown jewels on the desktop today will become features to be integrated into a variety of business applications, and not on fat clients, but on the web. That is how we see the mail & office suite evolving — they become so nicely componentized (and affordable!) that they get integrated into every business application. A lot of what we are working on at Zoho involves such integration effort, both within the Zoho suite as well as with a lot of partners. One word captures this process: commoditization. Commoditization of their core cash cows is what Microsoft fears most, yet, we believe it is utterly unavoidable. Today's announcement does nothing to address that basic fact."
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