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Will Microsoft Drive Cloud Revenues in 2010?

As the ramp-up towards the January launch of Microsoft’s (s msft) Azure platform reaches a crescendo, it’s worth asking whether the software giant, of all companies, could be the most significant revenue driver for the cloud in 2010. While cloud adoption is practically a foregone conclusion in IT circles, cloud computing revenues still pale in comparison to total corporate IT spending. To drive significant revenue growth in 2010, cloud computing software and service providers need the simplest, fastest ways to move more spending from enterprise deployments to the cloud. And Microsoft, Azure, and the Windows ecosystem could emerge as the catalysts.

In December, Microsoft reorganized by forming a Server and Cloud division, following a slow and steady rollout of Microsoft Azure throughout 2009. The updates included all the usual tactics of getting developers, service providers, and early customers on the bandwagon. In November, Microsoft officials held court at the company’s Professional Developers Conference, seeking to engage the development community. It became clear there that while Azure does not equal Windows, common development frameworks like .NET deliver a more seamless bridge between on-premise and cloud deployments than existed previously.

Microsoft’s cloud emergence is visible elsewhere, too. Amazon (s amzn) recently announced support for Microsoft Server 2008 on EC2, and the company has been offering at least some Windows support since late 2008. In November,  Amazon announced support for a software development kit for .NET developers that “provides a set of developer-friendly APIs that hide much of the low-level plumbing associated with programming for the AWS cloud, including authentication, retries, and error handing.” Rackspace has also announced Windows support is coming, with a beta release slated for early 2010.

Other factors are behind Microsoft’s cloud focus as well. One is the Microsoft Service Providers License Agreement (SPLA), which was updated in 2009 to make it easier for service providers to offer Windows options more cost-effectively. While there’s some debate in the service provider community about how the SPLA actually works and whom it benefits, Microsoft has provided more options than in the past, giving cloud service providers better flexibility.

It’s also worth considering the sheer volume of tools and resources that Microsoft is wrapping around Azure. As Stacey outlined in “Microsoft Azure Walks a Thin Blue Line,” there are plenty of tricks up Microsoft’s sleeve for supporting enterprises and service providers, including AppFabric, which “helps developers connect applications and services in the cloud or on-premise.” Microsoft is also going all out to provide interoperability with programming frameworks and software such as Ruby on Rails and MySQL.

Finally, there’s the issue of what enterprises really want from the cloud. While there’s been plenty of discussion about virtualization at both the enterprise and service provider level, Windows commands a far greater footprint than any hypervisor out there. It appears unlikely that many CIOs favor Windows administration as a long-term core competence. Perhaps those CIOs can offload some of their more basic Windows applications directly to the cloud first. That’s just one more way that Microsoft’s business model and dependence on success in the cloud could shift dramatically next year.

Image courtesy of TechFlash Todd on Flickr.

9 Responses to “Will Microsoft Drive Cloud Revenues in 2010?”

  1. I think those that doubt that the cloud will ever be a reality should really take a better look at the whole picture.

    The costs to business can be significantly reduced for a start (Hardware cycles, software, installation, maintenance). Small businesses will most likely adopt some form of the cloud sooner, with their needs being more basic which even google apps can now offer. In 2010 we can expect Google apps to even offer a whole lot more including Google Voice, Wave, improvements to docs (from their recent acquisitions) GDrive for storage (which will become a reality before Chrome OS is released Q4 2010) and a whole lot more, all in a low cost, easy to manage solution.

    Enterprises require enterprise level technology, but with Microsoft already now offering cloud based versions of its enterprise software (exchange, dynamics, sharepoint etc) and with internet connections often far faster than vpns, it makes better sense for businesses with teleworkers or remote offices, not to mention the fact that in early 2010 microsoft will be making available Office Web Apps, the web based version of MS Office (powerpoint, excel, word, Onenote).

    Lets also take into account the needs for IT staff, which can be drastically reduced or even eliminated (choosing to use a service provider instead). Infrastructure, security, patches, updates etc are all managed at the cloud level, by Microsoft themselves. Azure also allows developers to easily port their software to the cloud and utilize the power of Microsofts infrastructure with many apps working via the browser.

    I’m not saying that all businesses will be completely cloud based, but it wont be far off.

  2. “While cloud adoption is practically a foregone conclusion in IT circles”, really? Do you have examples which company is actually on the cloud?

    I for one, still doubt if cloud will ever be reality. If it will, I do believe MSFT is the only one people will choose.

  3. I’m not sure what your point here is. You’re making a lot of unfounded assumptions about what companies and “IT circles” want without really any sort of references at all. The whole article is based on these assumptions…which begs the question, why would you write an article posing a question based on unfounded assumptions? If your point is that more services will support Microsoft’s cloud platform, fair enough. But to extrapolate to MS as a leader seems a bit reachy and wish-washy to me.