Microsoft (MSFT: 20.06, -1.19 (-5.60%)) the world’s largest IT company, known for revolutionizing personal computing, has lasted through international conflict, the dot com bubble, anti-trust legislation, and is now continuing onwards through a monumental election and the global financial crisis. The Washington based company has received a lot of criticism in the past few years regarding their latest product offerings, especially Windows Vista. As an IT powerhouse and a market bellwether, investors should be looking forward to see where Microsoft is heading to battle skeptics and the threat of losing market share.

Quick Earnings Recap

Microsoft, operating on one of those awkward fiscal years, reported Q1 2009 earnings in late October, with an EPS of $0.48 with revenue growth of 9% from Q1 2008 as annual sales grew by 20%. Management did mention that many customers are looking to spend less while milking out more from their current computing assets. Expect this trend to continue for the next year as IT spending is flat with end users looking to cut costs by postponing some of their IT related capital expenditures. Enough of the general IT commentary, the important issue at hand is how Microsoft is going to rekindle their growth and assuage any concerns over their plethora of products.

Office for Free?

Microsoft announced late October that their coveted star, Microsoft Office, will be available for free online. This maybe shocking for many who realized that the Business Division, of which Office is apart of contributes roughly 31% to their top line, but this is a strategic move to compete with GoogleApps. This form of computing is known as SaaS, or Software as a Service, which often times is powered by a cloud. Refer to my previous article about the investors perspective on cloud computing for more details. This strategic shift could possibly lure more users from rival Google’s (GOOG: 310.02, -2.06 (-0.66%)) products and back to the legacy office tools. The SaaS approach has caught on as end users do not have to devote valuable system resources to common processes, but instead access them through a web browser. I think this shift by Ballmer and his team can offer much upside potential, as users can access Office files from any machine linked to the Internet, a true business solution.