The oncoming storm

Microsoft gets serious about the cloud

Elliot Bentley

New initiatives attempt to woo volume big spenders to Azure, and Windows Server hybridizes with cloud platform.


Microsoft yesterday trumpeted a series of news announcements on the back of its annual report to shareholders. Judging by the emphasis on Windows Azure, it seems the Redmond giant is keen to prove its products remain essential in a world moving to the cloud.

This “wave” of announcements is a “major milestone”, wrote Cloud VP Satya Nadella, with an aim to be “at the core” of a market expected to be worth more than 2 trillion dollars within the next decade.

With years of experience in the enterprise sector, Microsoft knows that the big, reliable money comes from a smaller number of big clients. And they don’t come much bigger than the US government, which is being explicitly targeted with a new “Windows Azure US Government Cloud”.

Microsoft’s answer to AWS GovCloud (which today secured a $600m contract with the CIA), this tailored region of Azure also adheres to specific government regulatory and compliance regulations. However, Microsoft’s key differentiator may be a slightly higher FedRAMP certification.

Another source of big spenders is the enterprise market, on which Microsoft still retains a strong hold. From the end of the month, volume licensing customers will be offered price discounts and extra payment flexibility for Azure. An obvious ploy perhaps, but one which may see the company retain existing customers eyeing up the cloud.

Next week, the company will also release a new version of Windows Server, which takes Several cues from its forays into cloud. This includes an “Azure Pack” which allows multiple servers to be pooled into a PaaS-style offering (hybrid clouds, anyone?), and will be compatible with new Remote Desktop clients for – shockingly – iOS and Android devices.

It all comes during a phase of major transition at Microsoft: long-serving CEO Steve Ballmer is to step down in 2014, and recently restructured the company in line with his vision of “One Microsoft”, which will focus on providing “devices and services”.

Though the company’s response to the biggest computing trends of the past decade – the internet, social networking and smartphones to name just three – has been sluggish at best, it has embraced cloud computing with gusto. It’s even begun hosting many of its first-party products on Azure, including Bing, Office 365 and servers for the next-generation Xbox One games console.

Long-term it remains to be seen if cloud hosting will generate huge profits, but the low-margin strategy being adopted by many companies in the market probably suits Microsoft just fine. Despite the slow progress of high-profile consumer devices like its Windows Phone and Surface lines, revenue grew 6 percent to $77bn from the previous financial year, with profits also up marginally.

Photo by Microsoft PR.

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