Microsoft's SaaS Strategy Leverages Telcos

Nearly a year ago in this space I suggested that telecommunications carriers were positioning themselves to deliver a new generation of utility computing services (Telcos jump into utility computing). At that that time I focused on the telcos' efforts to expand their managed services aimed at assuming greater responsibility for customers' network, security and storage management requirements. More recently, the telcos have set their sights on the application layer with a new round of offerings that venture into the Software-as-a-Service (SaaS) market.

The latest example of the carriers' expansion into this segment of the market came with the announcement that Verizon will be reselling Microsoft's rapidly evolving Windows Live solutions in 2007. The announcement is an outgrowth of an alliance that has been in place since 2002.

As a result of their joint announcement in August, Verizon's digital subscriber line (DSL) and fiber optics service (FiOS) subscribers will now have access to a co-branded Microsoft Live.com homepage, Windows Live Search capabilities, Windows Live Messenger, Windows Live Mail, a Windows Live Toolbar and Windows Live OneCare computer safety scans. The new services replace the MSN Premium services and McAfee security software currently offered by Verizon.

This announcement has several significant implications:

First, this is just the first of a series of similar announcements that you can expect to see from Microsoft and other telcos aiming to deliver a new set of 'value-added' services on top of their traditional voice/data transmission offerings.

Second, expect Microsoft to expand its portfolio of Live services to include customer relationship management (CRM) and other business-oriented applications that are increasingly being delivered via the Web by an assortment of SaaS providers. If the telecommunications carriers succeed in selling the first round of Live services to small- and mid-size business (SMBs), Microsoft will make an effort to push its next round of business applications through this channel as well.

Third, the line of demarcation between the traditional voice and data sides of enterprise organizations is blurring because of the advent of Internet protocol (IP) technologies. This opens the door for organizations to consider a broader array of suppliers to satisfy their needs.

Fourth, and finally, given today's economic climate, organizations of all sizes are seeking to reduce their IT and telecom spending by outsourcing a greater share of their operations. As a consequence, a growing number of customers are adopting SaaS and managed services so they can focus on their core businesses.

The bottom line

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