Microsoft to push harder for cloud

Microsoft is shifting its strategy away from pitching itself as a company that can offer companies a choice of software or hosted services, toward pushing the cloud, an executive said on Thursday at the software giant's annual financial analyst meeting.

A year ago, Microsoft was telling customers that the company is uniquely positioned because it offers a choice of on-premise or cloud-based service, said Kevin Turner, chief operating officer for Microsoft.

"We've changed that. I don't think that was a good move. We're going to lead with the cloud," he said.

Still, while its message to customers may change, the company still expects to sell both software and hosted software.

"Leading with the cloud helps better position Microsoft to sell more on-premise products than ever before," he said.

Microsoft is also doing some "hand holding" to help customers work out implications of the cloud on budgeting. "It's a shift from capex to opex," Turner noted.

The company is also showing companies that they can more easily move to the most recent software by using the cloud, he said. Cloud services "allow us to take that burden off our customers and they are more than willing to give that to us," he said.

Its approach is paying off, he said. Seventy percent of deals for cloud services at Microsoft during its fourth quarter were new customers, Turner said. Those companies were switching from IBM Lotus Notes or other competitive products, he said.

Two new customers for Microsoft's cloud services include Dow Chemicals, which is using cloud-based versions of Exchange, Office Communications Online and SharePoint, as well as Hyatt hotels, which is using similar services for 17,000 employees.

Turner said that in fact, some customers are coming back from Google. "What we're seeing now in the marketplace are win-backs. So companies that tried, are coming back," he said. Turner named Datatune, Vinci and Serena Software as companies that moved to Google Apps and back to Microsoft.