Reading through a piece about Microsoft’s SaaS initiatives I couldn’t help thinking of the great book from the mid 90s written by Christensen called The Innovators Dilemma, When New Technologies Cause Great Firms To Fail.
The only way for Microsoft to counter the threat of a new technology like software a a service (“SaaS”) is to create a separate division with transparent licensing over the Office suite and a lot of autonomy to go make it work! I would prefer a model where Microsoft supports partners to provide MS under a SaaS model with MS providing these partners with integration for users across products and services and a certification program rather like Salesforce with its App Exchange. A business with Google Email would ask its MS partner to easily integrate this with the Corporate Wiki, MS Calender and Push Email product. This would hurt Google more than MS by ruining Google’s “suite of good enough products” strategy but more on this later. Best of breed will beat best of suite.