Microsoft Reports Growth in SaaS Delivery Model

Published: July 19, 2006

by Alex Woodie

It looks like Microsoft is catching the Software as a Service (SaaS) bug. A week ago it unveiled the pending delivery of CRM Live, and this week at the HostingCon 2006 conference, the software giant launched a new release of Windows Hosting, its software package that allows third-party hosting companies to run Windows for their clients. Microsoft also reported growth across its hosting segments.

Windows-based Hosting is one of three packages Microsoft offers to business partners looking to break into the Windows-based SaaS business. The other packages are the Solution for Hosted Messaging and Collaboration and the Solution for Windows-based Hosting for Applications. This week Microsoft introduced Windows-based Hosting version 4.0, which adds support for its latest tools, including the SQL Server 2005 database and the ASP.NET 2.0 development language.

While Microsoft is inching into the role of SaaS provider with products like CRM Live, which it will run for customers in its own data centers, the software giant still relies on partners to do most of the heavy SaaS lifting. "The success we've had in the past year in expanding our partner ecosystem and the increasing popularity of our services help reaffirm our strategy of enablement," says John Zanni, director of Worldwide Hosting at Microsoft. New Web interface technologies and almost unlimited bandwidth are propelling the SaaS model, he adds.

Microsoft currently counts 84 service providers that utilize Hosted Messaging and Collaboration and 142 hosting providers that use Windows-based Hosting. Microsoft did not provide a number for Windows-based Hosting for Applications.

The software giant this week singled out two SaaS partners, including German Web hosting provider Intergenia and Portal Tone of South Korea. Portal Tone recently signed on with Microsoft's Web hosting platform to manage hundreds of thousands of small e-commerce storefronts. Philhwan Yun, chief executive and founder of Portal Tone, says his company picked Windows because it "provided the best performance in hosting and managing e-stores on a large scale."

Meanwhile, Intergenia, which runs 2.2 million Web sites across more than 20,000 servers and was recently named the second-largest Web hosting provider in the world by NetCraft, runs 95 percent of its Web sites on Windows-based Hosting 3.5. "We are seeing a significant upswing in the software-as-a-service market in Germany, and Microsoft solutions for Windows-based Hosting and Hosted Messaging and Collaboration are helping us to capitalize on this opportunity," says Thomas Strohe, the company's founder.

Microsoft is also making strides in expanding Windows-based Hosting for Applications, which is used to deliver Web-based access to Windows applications. The company is working with service providers like NaviSite and OpSource, which in turn are working with ISVs to create and deliver SaaS-enabled applications using Microsoft technologies. NaviSite and OpSource are running "incubation centers" and "ISV Sandboxes" where they can collaborate with ISVs on new SaaS offerings using Microsoft technology. Microsoft is also working with SWsoft, SMBLive, and WebHost Automation to enable third-party ISVs for the SaaS revolution.