Until very recently software has been purchased in a box, or through a download, or businesses purchasing license packs. Just about all this software runs on desktops and on-site servers.

Cloud computing changes this model by allowing a business to access computer assets on demand as it needs them, from servers located off premises, which are “in the cloud.”

With cloud computing, if you have Internet access, you can also access your applications and files. Cloud computing has become viable in the past few years because of the increase in high-speed Internet access, and the common use of Web browser-based applications.  For many people, applications installed on the users’ computer and those running on a remote computer accessed through a browser have become almost interchangeable.

Cloud computing is cost effective because multiple companies can share servers and other computing resources, which can reduce costs significantly. Typically, most businesses only utilize at 10 percent of the server’s capacity at any given time.  The cost savings come when, using pooled servers in the cloud, 10 companies can share the expense of one server.

The cloud is particularly attractive for small and medium businesses, which in many cases cannot justify or afford the large capital expenditure of traditional IT such as hosted e-mail or a hosted collaboration/intranet tool like SharePoint. These small businesses can make the switch to the cloud more easily as they are both more flexible and they have less existing infrastructure and therefore less inertia to overcome in order to make the move.

Another persuasive reason for a business to consider moving to the cloud for IT services is that, like your electric or gas utility, users pay only for what computing resources they need, only when they need it.

Small businesses today are heavily invested in Microsoft technologies. For example Windows Operating Systems, Microsoft Office Suite and Windows Server are found in the vast majority of businesses in the United States and abroad. So, it is somewhat surprising to find that Microsoft is encouraging companies to move existing IT resources off their existing “grounded” infrastructure and move into the cloud.

To understand why Microsoft is today becoming a leading proponent and provider of cloud services one has to look back to 1995. Microsoft launched Windows 95 and Office 95 and seemed to have a lock on virtually all the software running on small business desktops. That grip turned out to be rather weak, when in the late ‘90s, the Internet, the Netscape browser, and Google searches changed how we use computers. It took Microsoft several years to catch up and redefine itself in the Internet-based computing world we have today. Along the way Microsoft has found it has a formidable competitor in Google, Inc.

Six years ago, Google launched Gmail and it has led to the acceptance of Web-based e-mail even in business environments. Google followed this up with Google Apps, a suite of Web-based applications including word processing, spreadsheets, calendaring and more. Today, many businesses are asking if they should continue with the Microsoft Office/Exchange infrastructure or move to Google Apps Premier and Gmail. With its inexpensive cost of $50 a year and universal availability, many companies are adopting Google cloud computing as an alternative to Microsoft.

In order to stem the loss of its Office market share to Google, Microsoft is attempting to again reposition itself, this time as a cloud-based provider of online software and IT infrastructure.

Microsoft is not new to the cloud. It launched Hotmail in 1996 and in 2005 launched Windows Live, a hybrid of client and cloud-based applications. Microsoft’s next cloud move was to launch Microsoft Office Live, a Web-based set of tools for online storage, file sharing, Web site design and hosting. These tools were designed to work with conventional, desktop-installed Microsoft Office, but could also be used separately.

In 2010, Microsoft took a bold step into the cloud with its Business Productivity Online Suite (BPOS).  At its core, BPOS provides a company with an enterprise-class, cloud-based messaging and collaboration platform without having to make substantial investments in servers and licensing software.

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