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Wednesday, March 09, 2005

Microsoft To Enter Service Business?

Faced with limited growth opportunity in a mature software market, Microsoft may be weighing a future as a service provider. The company has quietly launched a pilot project from within its IT department to provide full-scale outsourced IT services to battery maker Energizer Holdings Inc. Microsoft gradually assumes management of Energizer's Windows desktops, including software distribution and related upgrades, operating system management and management of security measures such as antivirus, antispyware and firewall technologies. Microsoft will also take over help desk and end-user support activities, adding 24/7 support, managing all e-mail services and server management and electronic document storage. The corporate plans also revealed that Energizer will continue to manage its non-Microsoft systems, including its SAP implementation and other specialty applications. It will also still handle its own user accounts, corporate network and the management of its PCs and PDAs.
Microsoft has historically been absent from the cut-throat service provider business, although it has offered some services through its consulting division. It's a challenging business, with high labor costs and constant price pressures, compared with the product business, where Microsoft is naturally more familiar, experts said. The outsourcing arrangement, which has no specified end point, operates out of Microsoft's IT department, and uses the same staff members who run Microsoft's internal operations. Microsoft often touts its own global enterprise, which supports 75,000 employees, as a giant test bed.
Microsoft's move into the service provider business will certainly irk the likes of IBM Global Services, Hewlett-Packard Co. and EDS, which will likely reassess their relationship with Microsoft should it become a competitor. One possible reason for entering the services business at this point is that Microsoft will have other opportunities for selling more software in addition to services. With Microsoft inside a customer's facilities, it's less likely they would opt for Linux or products from IBM or Oracle Corp. Interesting move by Microsoft - besides being a new area of business , increasingly other partners of Microsoft will try and develop different type of relationship with it -not sure whether this would benefit microsoft at all..

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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