Monday, May 22, 2006

Microsoft to Invest in SaaS Infrastructure for Windows and Applications

"Yes, the software giant is determined to supersize itself by building the mother of all data centers (time to buy Cisco stock), dramatically upping its investment in MSN, and taking no prisoners in the launch of its new advertising initiative, AdCenter, into the already-shark-invested waters of the search advertising marketplace. Everyone agrees: All this is aimed squarely at Microsoft's new nemesis, Google.

Let's review the facts: Microsoft stunned Wall Street last week by announcing that it expects to have spent approximately $6.2 billion in research and development by the end of its current fiscal year (that's June 30). And according to Reuters, analysts were told that R&D spending would increase to a whopping $7.8 billion next fiscal year. As a result, projected income is expected to drop at least 10%.

Where is all this money going? Most will be funneled into building the infrastructure necessary to support Microsoft's upcoming wholesale conversion to software-as-a-service (SaaS)."

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