Microsoft has always had a chequered relationship with bleeding edge Technology ever since the company was created and the fact it has announced that it is embracing Cloud Computing "fully", a concept that Microsoft was reluctant about, means that it could be digging its own grave.
There are five main reasons why this is the case.
(1) By saying that Cloud Computing is right, Microsoft has open the floodgates that will make the technology become mainstream. Obviously, there's a strong sense of deja-vu with Bill Gates legendary U-turn on the Web which saw a then-little known browser called Internet Explorer ship with Windows 95 SP1. Legitimacy is what Cloud computing advocates are after.
(2) Microsoft has not been a keen cloud computing supporter which means that it could take some time to catch up, especially given the fact that it came in late and the market is already crowded and dominated by a number of big players - Google, Amazon and a myriad of smaller, more nimble and resilient players like Zoho. There's no single "Netscape" which Microsoft could take down overnight.
(3) Cloud computing represents a huge paradigm shift for Microsoft, even bigger than adopting Internet Explorer and embracing the web. It could fundamentally change the way Microsoft works as Cloud computing shifts the balance of power to the datacenter rather than on the client.
(4) Cloud computing could kill Microsoft's two giant cash cows; Office and Windows. The first one is a dead cert and has prompted Microsoft to innovate quite radically. For example, it has already announced plans to launch an online Microsoft Office suite under the codename Albany and is heavily promoting a three-user Microsoft Office 2007 Home and Student Edition for £49.99. Office generated nearly USD 19 billion in the last fiscal year, out of which nearly two-thirds was pure profit. It could soon be a lot more difficult, even if Microsoft turns to advertising.
(5) As Gordon Haff from Cnet puts it (opens in new tab), "Brilliant computer scientists and engineers are scarce" and can't be moulded overnight. Whether Microsoft will be able to poach them to work on what is essentially a fifth column (opens in new tab) without the company itself remains to be seen. Ditto as to the reaction of existing Microsoft engineers.
Exciting times indeed. And the global economic that just hit firms worldwide could hasten the adoption of cloud computing.