Did Microsoft Let Cloud Computing Slip Away?

Blaise Zerega looks at the clouds and wonders:  Microsoft is perhaps the most important software company -- ever. But why isn't it pioneering cloud computing and leading this next great wave of technology? Why has it distracted itself by going to war with a giant search company over online advertising instead of focusing on it's core strengths?

Today's Wall Street Journal reports on the longtime friendship between Steve Ballmer and Bill Gates: it's an interesting read about the transfer of CEO power from Gates to Ballmer back in 2000. There was friction out of the gate, and one of the first casualties was NetDocs, which WSJ writer Bob Guth describes as " a promising effort to offer software programs such as word processing over the Internet."  He goes on to write that the project died out of fear of eating into revenues from Microsoft Office which was sold box-by-box, or pre-installed on PC hard drives.

WOW. Imagine if NetDocs had been developed, and was available for free or even for rent? Admittedly, broadband penetration wasn't then what it is today, and there may have been some issues with figuring out payment, but what if, what if? What if Microsoft had developed NetDocs?  It would have put itself in a strong position to compete with Google on its own turf -- software applications.  Instead it was the search giant that released online applications for tasks such as word processing, spread sheets, presentations, and email. First made available in October 2006, Google Apps can be accessed online for free and thus undermine Microsoft's business model of selling software.

Then this spring, Google landed another blow to Microsoft's software dominance by partnering with Salesforce.com, which makes applications used by sales representatives available online by subscription. By themselves, Google Docs are a threat to Microsoft's consumer business, but bundled with Salesforce's offerings, they are a threat to Microsoft's corporate business.

Look for Microsoft to fall further behind if -- as the research firm 451 Group is urging, Google were to buy Salesforce. Oh, my.