Microsoft has resisted moving to SaaS (software as a service) as strongly as Webex (one of its main competitors in the RTC space) has resisted offering a licensed product. Why do we see such stubbornness on the part of collaboration vendors. Our belief is "give the customer what he wants!" If they want it as a service give it to them as a service! If they want it as a license then give it to them as a regular license already and let's not make such a big deal out of a way to distribute software.

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Last January Microsoft made Outlook available through its MOOL service. In October they announced Windows "live" and then Office "live" as well an a Memo from Mr. Gates which noted "This coming 'services wave' will be very disruptive." With the Acquistion of Groove and Ray Ozzie becoming CTO at Microsoft, another memo (from Ray) was sent out. In this memo he outlined a list of opportunities where Microsoft may have missed the boat, including AJAX, search, RSS, Office's failure to become a de facto source of Web data formats compared to PDF, and Skype's success in harnessing VoIP to make it a viable consumer communications service. "The next sea change is upon us," Gates wrote, as Microsoft seems to be preparing to move into the SAS space. The year ended with Windows Live Messenger being released into a semi-public beta.

So what is driving this change in business model at Microsoft? Some of this change has to do with the Ad revenue that Google is generating with AdWords, and Microsoft (and Yahoo) have released similar services. Microsoft now has a new option for people tired of seeing the advertisement in their MSN Messenger window: watch video clips instead. With the introduction of Windows Live Messenger, the Redmond company is testing a feature it calls the Video Carousel that replaces the graphic ad with interactive video content from MSN.

Lots of data points showing that Microsoft may be moving towards the SAS business model. But is Microsoft really on the SAS boat after so many years of touting licenses (and building their revenue model on them)? We have seen Microsoft move quickly and decisively before (remember the Internet memo from Gates in 1995), so we know they can do it (and that agility is something that not many companies can boast about). When Microsoft bought PlaceWare (now Live Meeting) in 2003 they got a management team that knows how to sell SaaS because that was PlaceWare's business model. So the talent is there, the $64 Billion question is "is the WILL really there?"