What’s Driving Microsoft’s Strategy: Virtualization, Software as a Service, Unified Communications, Online Collaboration

As COO of Microsoft, Kevin Turner is responsible for the strategic and operational leadership of some 38,000 employees in Microsoft’s worldwide sales, marketing and services units. And along with Bill Gates, Steve Ballmer and five other top executives, Turner sits on the senior leadership team that charts Microsoft’s strategy.

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In a briefing at the company’s headquarters in Redmond, Wash., this week, Turner noted that there were four key enterprise trends shaping Microsoft’s strategic direction and future product offerings as well as how it will spend $7 billion in its R&D department.

The first is businesses’ growing interest in virtualization. “It’s not a trend,” Turner says of virtualization, “but a theme.” And that theme relates to cost savings using virtualization tools, such as Microsoft’s Hyper V product. (See Microsoft Releases Beta of Hyper-V Virtualization Tools.) Though there are a couple of different areas where Microsoft is building out its nascent application and desktop virtualization offerings, server virtualization is where it’s focusing most of its efforts in a bid to unseat market leader VMware.

The second important market trend is the rise of on-demand or software-as-a-service applications. Microsoft calls its new offerings in this area as “software plus services,” and Turner says that Microsoft’s move into this space is because customers are demanding it. (For more information, see Microsoft Buys into the Cloud and Microsoft Launches On-Demand CRM Software into a Crowded Market.)

“People want choice,” Turner says. “We believe that most large customers will have a variety of business models that relate to software, and there are some bits of their information that they won’t want [someone else] to host or control.” For those that companies want a third-party to host, Microsoft or its partners are already or will soon be offering to host a multitude of Microsoft products and services (such as Office, Dynamics CRM, Exchange or SharePoint) on its servers.

The third area is around unified communications, Turner says, and companies’ “mobility story,” which includes providing the ability to connect voice, data and video over communications devices, such as smartphones running the Windows Mobile platform and other telephony devices, and the computing desktop. (Also see: Seven Fantastic Free Windows Mobile Apps.)

And fourth, Turner says that the “hottest area” in Microsoft is in the collaboration space and Microsoft’s SharePoint server product, which offers companies the ability manage their documents, records and other content, search that content and provide other workflow and collaboration opportunities. (For more, see SharePoint 2007 Demystified and Microsoft Reveals Mesh Folder-Sharing and Sync Platform.)

Taken together, these four market trends are where Microsoft will be releasing new products and solutions that will “really help [customers] solve their problems,” which, he says, is exactly what they are looking for from Microsoft right now.