Microsoft Wants to Tap Cloud Computing Growth with Office 365
Source: Wikipedia
Microsoft (NASDAQ:MSFT) will announce the market release of Office 365, a web-based productivity software product, on June 28th in an event in New York. [1] Microsoft launched the beta version of Office 365 in the autumn of 2010, and the market release represents a major product release from Microsoft and a symbolic move away from the traditional way of selling software to cloud computing. Through Office 365, Microsoft can establish itself in the cloud-computing market as rivals like Google (NASDAQ:GOOG), Salesforce.com (NYSE:CRM) and Amazon (NASDAQ:AMZN) are already well established in this market.
Microsoft Office is the most valuable business for Microsoft and accounts for more than 30% of our $27 price estimate for Microsoft stock – which is around 10% ahead of the market.
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Microsoft still dominates the productivity software market
Even competition from Google has increased, Microsoft still dominates the productivity software market with a lion’s share of more than 90%. Productivity software is essentially the Office suite of products, which includes applications used primarily for word processing, spreadsheet preparation, presentations and email.
Cloud computing market expected to show fast growth
Through Office 365, Microsoft is not only looking at cementing its position in productivity software market, but also ride on the faster growth expected out of cloud-computing market. Cloud-computing is based on the concept in which the software is delivered remotely over the Internet on an as-needed basis with little or no implementation services required.
It is expected to result in cost saving for enterprises, which is the primary reason why the market for cloud-computing services and software is expected to grow more than 27% annually over the next five years and reach $73 billion by 2015. [2]
See our complete analysis for Microsoft stock here
Notes:- Microsoft Office Division to Make Announcement, press release, June 20th, 2011 [↩]
- Cloud market growth prospects, Wall Street Journal quoting IDC as the source, June 27th, 2011 [↩]