Microsoft Shifts Focus to Web-Based Services and Software

Strategic Insights -

As the tech giant's plans for the Internet evolve, a series of announcements expected this week aims to emphasize its narrower focus on providing software for the World Wide Web and electronic commerce services. Microsoft's alliance with Ford Motor Company's MSN Carpoint, its online car-shopping service, is set to be announced, followed by further plans for the future of Microsoft's MSN Internet-access service and the Web-based versions of its popular Office productivity software.

Key Takeaways:

  • The alliance between MSN Carpoint and Ford will integrate the auto maker's car and dealer data bases with the popular Carpoint Web site, allowing buyers to access more information for making online purchasing decisions.
  • The agreement is intended to give buyers more control over their purchase, enabling them to see which car models local dealers have in stock and request delivery for a test drive.
  • Microsoft's role in the alliance is to provide the software that enables such levels of customization, leveraging its Web site to reach a large audience of potential customers.
  • The partnership is a vote of confidence in Microsoft's technology and intentions, with Ford seeing the software maker as a supplier rather than a competitor in the Internet commerce field.
  • Microsoft's market power and deep pockets have raised concern among industry executives, who fear the software maker could become a rival rather than a partner in Internet commerce.
  • The company's agreement with Ford is not exclusive, and Microsoft hopes to reach similar arrangements with other car companies and its other Web sites, such as the Expedia travel site.
  • Microsoft is expected to cut the price of its MSN service to as low as $4.95 a month and offer its Office productivity software as a Web-based service for $14.95 a month.

Statistics:

  • 40% of car buyers do research on the Web before shopping, according to J. D. Power & Associates.
  • MSN aims to undercut e-commerce rivals like IBM by offering more competitive pricing and tailor-made services.
  • Microsoft's Office software represents nearly half of the company's business, making it a critical decision to move to Web-based applications.

Sources:

  • [1] Consultants told the Wall Street Journal that the alliance between MSN Carpoint and Ford will be announced.
  • [2] Industry analysts, such as David Readerman of Thomas Weisel Partners, believe that Microsoft's partnership with Ford is significant for the company's internet-based strategy.
  • [3] "Almost half of car buyers do research on the web before shopping," said a statement from J. D. Power & Associates in a press release.
  • [4] According to Thomas Weisel Partners, "Microsoft is building on one of its successful Internet sites to establish the deepest business-to-business relationship it has developed so far."
  • [5] Industry consultant, speaking on condition of anonymity, mentioned the price-cutting tactic of Microsoft, aiming to undercut E-commerce rivals like IBM.
  • [6] Ed Zander, president of Sun Microsystems, said in an interview that "Microsoft has to move to Web applications because it has no choice."