NEW YORK (TheStreet) -- The latest "fashion topic" in technology investing is Microsoft's (MSFT) return from the stock market backwaters. It's all about howMicrosoft's new and improved products will stem the market sharedeclines of the last couple of years.The nature of these "new and improved" products is, however, extremelypoorly understood. The hourly explanations on CNBC seem to becentered on the Windows start button returning after a brief hiatus. The key to understanding a potential Microsoft turnaround has nothingto do with fixing a small bump in the road in the form of a misguidedapproach to eliminating the start button. If that were the source ofMicrosoft's decline, then Microsoft must have been doing extremelywell until just before the launch of Windows 8 on Oct. 26, 2012. But, of course, Microsoft was in decline long before the start buttondisappeared last Oct. 26. Likewise, a Microsoft renaissance will be based on something entirelydifferent, and that is a total transformation away from localizedsoftware to cloud computing. Basically, Microsoft's future residesin copying Google's ( GOOG) Chrome OS and Salesforce.com ( CRM). Let me explain. Traditional PCs -- both Windows and the Mac, as well as enterprisesoftware from companies such as Oracle ( ORCL) -- are based on the idea thatyou buy and install programs on your PC and server sitting in acloset. These programs need to be maintained and upgraded by yourin-house staff, or yourself if you're in charge of the household orsmall business.
Maintaining and upgrading software not only costs a lot of money tobuy, but it also takes a lot of time -- which is also a huge cost. Thisis good for IT consultants, Microsoft and Oracle, but not for anyoneelse. This is where companies such as Google and Salesforce.com entered thepicture. These companies harnessed the open Web in order to deliversoftware as a service (SaaS). You don't need any special software toaccess Google and Salesforce.com -- just open a browser window. Guess what? This is the direction in which Microsoft is going aswell. Let me offer a few examples of what is being implemented rightnow: 1. Outlook vs. Outlook.com: If you were working in white-collar office America in the last 20years, you probably spent most of your computer time in MicrosoftOutlook. This remains the most powerful software of its kind, but itmay also be overkill for many users. It is also hugely cumbersome.
Microsoft has taken a step in this direction with Windows 8 RT. Onlyapps coming from Microsoft's tightly controlled online store can beinstalled. This means the ultimate in security. 3. Microsoft Office Online: How many times in the last 20 years did you buy a new version ofMicrosoft Office for $150 or $450, and install it on one PC? I usedto do it every three years. This is changing -- on two fronts:
- Instead of paying $150-$450 for a one-PC install, you now payMicrosoft $100 per year to use Office on five devices simultaneously.You get upgrades as soon as they hit -- not once every three yearsafter paying another $150-$450 per PC. You can now access much of Microsoft Office online -- for free.No need to even pay the $100 per year. Just fire it up from insideany browser.