Why Azure Could Help Drive Cloud Revenue in 2010

Azure, the cloud computing platform that Microsoft rolled out this week, could drive significant cloud revenues in 2010, as the company is more uniquely positioned to serve the needs of enterprise customers than any other large-scale cloud provider to date.

Microsoft has been selling software to enterprises since its inception; it’s in Redmond’s DNA to offer solutions to many of the deepest installed bases in the world. And its well-established focus on the developer community means it knows how to make application development surrounding software platforms work well. Add to that the fact that the company has deep pockets, which means it could afford to give Azure offerings away until it gains momentum.

To get a better sense of Azure adoption and use, I spoke with Grant Leathers, director of enterprise infrastructure, and Andy Lapin, director of enterprise architecture, at Kelley Blue Book, which operates the popular car site www.kbb.com. As both longstanding Microsoft customers and Azure alpha customers, they have been following Azure developments since the beginning and have a clear, compelling and — I believe — soon-to-be common use case.

The www.kbb.com web site serves some 14 million monthly users and requires two data centers. Its preferred method of operation involves running a primary “hot” site, then backing it up with a secondary “warm” site which can be used in disaster recovery scenarios. However, since there is relatively good uptime at the primary site, the secondary site implies dozens of systems that are sitting idle most of the time. So the opportunity to move this entire secondary infrastructure into a cloud service that could spin up or down as needed could eliminate the need for a second physical facility.

For Kelley Blue Book, the value proposition surrounding cloud computing has always been clear. “When you compute out the cost of a cloud option compared to hosting the backup site yourself, the savings are obvious,” said Lapin. “Just think about the servers, maintenance, power and space costs. All of that goes away and only a fraction of that spending is needed to spin up a similar cloud-based infrastructure.” It currently has a working www.kbb.com replica in the cloud, and has especially benefited from integration with Visual Studio, which allowed for the reuse of existing skill sets as well as easy porting of local applications.

“The other way that we plan to use Azure is when we launch new products,” said Leathers. “We currently spend a lot of time calculating projected user growth to server requirements and much of that forecasting can now go away. We can launch in the cloud with 5-10 servers and if we need 10 more, they’re just a few clicks away. All of our learning can occur in the cloud with the ability to add capacity on demand.”

Not everything is perfect, however. While Kelley Blue Book has seen great scalability coming from the compute size of Azure, the SQL Azure scaling options are limited to smaller database sizes, essentially restricting some powerful, data-heavy applications from cloud deployments. And the performance and management tools for Azure seem to lag the core offerings.

But overall, Kelley Blue Book’s experience with Azure has met their expectations, allowing them to leverage business and technology relationships with Microsoft while jumping in to cloud computing with a relatively simple, straightforward use case.

Microsoft is unquestionably late to the cloud computing party compared to Amazon (s amzn), Rackspace (s rax) and Google (s goog). But the combination of an enterprise software sales culture, a massive installed software base, and developer-friendly approaches will likely mean even more companies adopt Azure in 2010, turning it into a significant driver of cloud revenue.

Image courtesy of Flickr user Carlos Gutiérrez G.

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