Not long ago, at a press conference held in Silicon Valley, Ray Ozzie, Microsoft's chief software architect, said that cloud computing might reduce Microsoft's profit margin. Ozzie pointed out that many people in the industry believe online cloud computing services will be the new goldmine of the IT industry, but in fact, its profit is not as high as that of software sales. After launching cloud computing, Microsoft's profit margin will decrease. "The profit margin of cloud computing services is not as large as that of software sales. Therefore, it will increase our profit and also our revenue, but our profit margin will not be as big as before."
Microsoft's traditional products such as Windows, Office, and Exchange, which are installed by enterprises on PCs and servers, generate significant profit margins. As of the end of March this year, the company's profit margin was 79%. If profits start to decline, investors will lose interest in Microsoft's stock.
Two years ago, Ozzie replaced Gates as Microsoft's new technical director and is leading Microsoft's transformation from a software kingdom to computing services, providing users with services on the Internet. He pointed out that when he joined Microsoft in 2005, many people in the company first thought of PCs rather than the network.
Since then, Microsoft has developed a series of products for the cloud computing era, including the upcoming Windows Azure platform for web-based software and the Live Mesh service, which allows users to share files on an online desktop. He said that cloud computing services like email will generate more revenue than products like Windows Azure. In the cloud computing market, for online customer service, Microsoft's main competitors include Amazon, VMware, and Google. Amazon's Elastic Compute Cloud service allows users to quickly develop applications for Amazon servers. "In this market, Amazon is the leader."
Ozzie said that Microsoft's top-notch research department, operating system experts, and approximately 5 to 7 million developers worldwide are all huge advantages for Microsoft.
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