Microsoft Declares The End Of Software

(MoneyWatch)  The irony of hearing Microsoft server and tools division president Bob Muglia hold forth on the benefits of software as a service (SaaS) yesterday was of a richness perhaps only Marc Benioff could fully appreciate.

When I sat down with the Salesforce CEO last year to talk about the competition the SaaS vendor would face in the coming years, Benioff said he looked forward to the day when the likes of Oracle, SAP and Microsoft would accept the premise of software delivered through the Internet because

we need the mainstream providers weighing in and saying... 'we think the future is the software service and it's the end of software, and Marc Benioff, what does he know anyway'... Now everyone is saying 'we're software as a service,' Microsoft is saying we're software as a service, SAP, we're software as a service, and Oracle we're software as a service... and we're like, well, I guess it's the end of software. [around 1:41 into the video]

Well, here's what Muglia had to say yesterday on the subject of SaaS: "We can really provide some very interesting options to our customers--[those who] want to provide the highest service for their employees but do not want to build themselves." After noting that SaaS allows customers to reduce capital expenditures, he added, "Customers can get an incredibly good experience at a cost lower than they could by running [the software] themselves."

Guess what else? Muglia assured investors that the SaaS model will also enhance Microsoft's profitability.

So after years of denigrating SaaS as a substandard experience that wasn't fit for enterprise consumption, after arguing that SaaS wasn't a sustainable business model (and impugning Salesforce's viability in the process), now Microsoft is saying, "... and it's the end of software."

Okay, not quite, but now that Microsoft has finally admitted that SaaS is at the very least a viable alternative, for both customrs and vendors, to on-premise software, when is Microsoft going to take the next step and offer all its applications as a service?