July 12, 2009 6:31 pm

Microsoft to step up Google battle

Microsoft is set to broaden its battle with Google this week as it pushes ahead with online versions of some of its core software, including final plans for a “cloud” operating system designed to extend Windows to the internet. The news comes days after Google took aim at Microsoft with the announcement of a PC operating system of its own, dubbed Chrome OS.

The rival moves point to an intensification of the battle between the technology giants, with Google trying to extend its internet platform to PCs, and Microsoft moving in the opposite direction. While Google’s PC operating system is not due to appear in new computers until the second half of 2010, Microsoft’s cloud operating system will be launched formally this year.

The software company’s latest moves into internet services, due to be revealed at its annual partner conference in New Orleans starting on Monday, mark a milestone in the “software plus services” strategy it has pursued for three years.

After investing heavily in the datacentres and software development to support these moves, it is now ready to outline plans for internet versions of some of its key products.

Among the most closely watched will be its plans for the next version of the Office suite of software applications, due to be launched early in 2010.

So far Google has had little success in selling corporate subscriptions to its own suite of lightweight online applications which rival Office, with paying customers said by the internet company to number only in the “hundreds of thousands”. But a free version of the software has attracted more than 15m users, putting pressure on Microsoft to offer more free elements of its own Office suite.

Stephen Elop, head of Microsoft’s Office business, reiterated that the company’s aim was to extend the ways it offers its software to customers. Most analysts believe a free, stripped-down version of Office online to rival the free Google Apps service would do little to hurt Microsoft’s revenues, since it would only appeal to relatively small numbers.

Microsoft is also set to spell out pricing and launch plans for its internet-based operating system, called Azure. This will see it leapfrog Google in the business of selling computing resources over the internet, allowing developers to buy capacity to run their applications based on the amount of storage, bandwidth or other resources they use.

Amazon has taken the early lead in this market, selling access to the computer network it built up for its online retail operations. However, the large base of developers who already rely on Microsoft’s technology, and the company’s ability to use its massive scale to undercut on price, are likely to make it a significant force in the market.

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