The VAR Guy

Yes, Microsoft is finally polishing its Software as a Service (SaaS) strategy. In addition to playing catch-up against entrenched SaaS companies like Salesforce.com, Microsoft must also deal with a growing number of open source providers — from SugarCRM to MySQL and Sun — that have jumped on the SaaS bandwagon.

In case you missed the news, Microsoft is aggressively ramping up a SaaS strategy called Microsoft Online Services. And the company is working real hard to include partners in that strategy, notes MSPmentor. But Microsoft’s SaaS efforts will face some innovative competitors, especially from the open source industry.

Consider these three quick examples:

• SugarCRM hosts its customer relationship software for customers, and also allows partners to host it on their own. CEO Jonathan  Roberts expresses great respect for Microsoft, but insists the closed-source software model is dead — even in the SaaS market.
• MySQL, the open source database, is gaining a big following in the SaaS market. You can bet that MySQL’s new owner, Sun Microsystems, will accelerate the SaaS efforts. And managed service providers like Logicworks are beginning to line up behind MySQL.
•  Morph Labs has launched a SaaS development platform using the Ruby on Rails open source environment and Amazon  Web Services.

The VAR Guy isn’t suggesting that SaaS and open source will combine to destroy Microsoft. On the contrary, it takes Microsoft three hours to exceed Salesforce.com’s entirely quarterly net income, and 10 hours to exceed Red Hat’s entire quarterly net income.

The real story here is customer choice. For the first time in more than a decade, The VAR Guy believes, the software market is wide open to healthy competition — mostly because SaaS and open source have achieved critical mass. But Microsoft continues to get its fair share — or more — of software sales.