Microsoft Survey Reveals 39 Percent of SMBs to Pay for Cloud Services Within Three Years

Research suggests increasing opportunities for hosting service providers to benefit from selling cloud services.

REDMOND, Washington, March 25, 2011 - Microsoft Corp. today released its global "SMB Cloud Adoption Study
2011," which investigates how cloud computing will impact small and midsize
businesses (SMBs) in the next three years. The research finds that 39 percent
of SMBs expect to be paying for one or more cloud services within three
years, an increase of 34 percent from the current 29 percent. It also finds
that the number of cloud services SMBs pay for will nearly double in most
countries over the next three years.

(Logo: photos.prnewswire.com/prnh/20000822/MSFTLOGO)

The findings show an increasing opportunity for hosting service providers
to profit in the cloud from offering services such as collaboration, data
storage and backup, or business-class email. Some key findings include the
following:

    - Those SMBs paying for cloud services will be using 3.3
      services, up from fewer than two services today.
    - Past experience with support from a service provider is a key
      driver of service provider selection among SMBs. Eighty-two percent of
      SMBs say buying cloud services from a provider with local presence is
      critical or important.
    - The larger the business, the more likely it is to pay for cloud
      services. For example, 56 percent of companies with 51-250 employees
      will pay for an average of 3.7 services within three years.
    - Within three years, 43 percent of workloads will become paid cloud
      services, but 28 percent will remain on-premises, and 29 percent
      will be free or bundled with other services.

"Cloud adoption will be gradual, and SMBs will continue to operate in a
hybrid model with an increasing blend between off-premises and traditional
on-premises infrastructure, for the foreseeable future," said Marco Limena,
vice president, Business Channels, Worldwide Communications Sector at
Microsoft. "As cloud computing becomes more ubiquitous and SMBs' existing IT
becomes outdated, adoption will grow rapidly. Hosting service providers
should consider the appropriate sales, delivery and support models to target
larger SMB customers that are more likely to pay for cloud services."

Recognizing that SMBs consume software in a variety of ways, Microsoft
offers a range of options for hosting providers to go to market with new
services targeting the SMB market.

"As SMBs continue to transition to cloud services, hosting service
providers, VARs(1) and SIs(2) will have a major role to play as advisors and
providers of IT services in hybrid environments," said Andy Burton, CEO,
Fasthosts Internet Ltd. "Hosting providers have expertise in selling cloud
services while VARs and SIs have experience selling to SMBs. Fasthosts is
helping to bridge this gap by helping VARs and SIs white-label cloud services
and deliver them as if they were their own."

Adoption of Paid Services Fueled by Profitability and Growth

The 2011 study indicates that in most countries, cloud service adoption
is not limited to SMBs that see themselves as fast growers. The study showed
little difference in adoption rates between SMBs that expect to grow in the
next three years (42 percent) and those solely focused on profitability (40
percent).

Growth companies want a scalable environment that can meet their
expanding needs, with an affordable, pay-as-you-go pricing model that
eliminates the need for over-investment in IT. SMBs that want to maintain
their size, but want to become more profitable, seek cost-effective,
efficient solutions that match their needs for predictability and low
overhead cost. Cloud services can serve both sets of criteria.

The Opportunity SaaS and IaaS Represent

The study also looked at adoption of software as a service (SaaS) and
infrastructure as a service (IaaS) and found that SMBs that are adopting both
SaaS and IaaS services are larger, more growth-oriented and more interested
in additional services, such as unified communications and remote desktop
support. This provides an opportunity for hosting service providers to offer
both SaaS and IaaS in order to acquire and retain high-value customers and
maximize revenue per customer.(3)

For More Information

In the coming weeks Microsoft will publish additional findings of its
"SMB Cloud Adoption Study 2011" on the Microsoft Communications Sector
Newsroom (www.microsoft.com/presspass/presskits/commsector/).

About the Research

The "Microsoft SMB Cloud Adoption Study 2011" research report was
designed and conducted in conjunction with Edge Strategies Inc.
(www.edgestrategies.com) in December 2010. The research questioned
3,258 SMBs that employ up to 250 employees across 16 countries worldwide:
Australia, Canada, China, France, Germany, India, Japan, the Netherlands,
Norway, Russia, Singapore, South Africa, South Korea, Spain, the U.K. and the
U.S. A copy of the full research report is available through
mscsus@webershandwick.com.

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in
software, services and solutions that help people and businesses realize
their full potential.

(1) VARs refers to Value Added Resellers.

(2) SIs refers to Systems Integrators.

(3) SaaS services were defined as business-class email, accounting
services, customer relationship management, file sharing, Web conferencing,
project management and specialized business applications. IaaS services
include file and data storage and backup, and data archiving and recovery.

Alex Vaught of Weber Shandwick, +1-206-576-5562, avaught at webershandwick.com, for Microsoft Corp. / NOTE TO EDITORS: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft's Rapid Response Team or other appropriate contacts listed at www.microsoft.com/news/contactpr.mspx.