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As Microsoft targets small business, cloud computing costs fall

Janet Kennedy

Dave Chan/The Globe and Mail

Microsoft Canada Co. is making a big push into cloud-based computing for small and mid-sized companies as lower prices make data storage and other online services affordable to even the tiniest of startups.

A fierce price war between Microsoft, Google and Amazon is driving down the cost of various cloud-based computing services, according to Microsoft Canada president Janet Kennedy.

"So that's great for consumers," Ms. Kennedy said in an interview. "We've made something from a very high-priced asset to a low-cost commodity."

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Microsoft, for example, recently dropped its computing prices by up to 35 per cent and storage prices by as much as 65 per cent.

Microsoft now generates roughly $800-million of its $2.2-billion in annual Canadian revenue from small and medium-sized businesses. And that revenue is growing much faster than the rest of its business, said Ms. Kennedy, who took over as president eight months ago.

"The small and medium market is exploding," she said. "There is this entrepreneurial startup spirit that's happening across the country."

Roughly 40 per cent of Microsoft's business customers use some form of cloud-based computing – storing and accessing data and programs over the Internet instead of a company's own computers. That's up from 2 per cent a year ago.

Among major Canadian customers for Microsoft's cloud services are Air Canada, Lululemon Athletica Inc., Loblaws Inc., Rogers Communications Inc. and Tim Hortons Inc.

The problem in Canada, Ms. Kennedy said, is that too many entrepreneurs and startups move to the United States as they grow larger.

"There are all these smart minds in Canada, and yet why aren't they building companies and growing here, and instead going to other markets?" she asked.

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Smaller companies that embrace tools such as social media and cloud computing, grow their revenues 15 per cent faster and hire more workers than companies with lower levels of technology adoption, according to a Microsoft-commissioned report released Tuesday.

The study by Boston Consulting Group looked at the technology practices of 4,000 small and mid-sized companies across five countries, including the U.S. and China. They grouped the respondents into leaders, followers and laggards, based on how much they use technology.

Companies were deemed to be "leaders" if they use a variety of technologies, including cloud-based online services, as well as social media, voice-over-Internet tools and productivity software.

Across all countries, technology leaders grow significantly faster than the overall economy.

The report concluded that moving more companies up the technology ladder would boost business revenues by $770-billion (U.S.) and create 6.2-million jobs.

Ms. Kennedy said Microsoft's new Vancouver training and research centre, set to open next year, is all part of the company effort to reach out to entrepreneurs and startups in Canada. Microsoft also offers startups as much as $50,0000 worth of free cloud computing "We are trying to figure out what can we do to help companies [become] technology leaders – to help them create jobs and invest," she said.

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Microsoft opened its first cloud data centre seven years ago. It now has 28 worldwide.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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