The giant's bid to join the world of cloud computing is likely to appeal most strongly to corporate users
After years of efforts by Google (GOOG) and Amazon.com (AMZN) to spin visions of a future where the Web supplants Windows, Microsoft (MSFT) struck back on Oct. 27. The software giant unveiled what one executive called the most important plan in 16 years aimed at keeping its Windows operating system franchise vital. "What we announced today was much broader than anything anyone has tried before," says Senior Vice-President Robert Muglia.
The project, called Windows Azure, was unveiled by Microsoft head techie Ray Ozzie during a conference for more than 6,000 Microsoft software developers at the Los Angeles Convention Center. Azure is an ambitious effort to create an operating system that allows for greater flexibility in using Windows—letting companies run some programs on their own computer networks while also commissioning Microsoft to dole out other tasks from its own massive data centers. If successful, Azure could transform Windows from a wasting asset to be defended at all costs into an offensive weapon that gives Microsoft advantages even Google can't match.
Indeed, Muglia compared the day's news to the 1992 launch of Microsoft's Windows NT, which enabled Microsoft to go from dominating desktop PCs into the much larger, more lucrative world of back-office corporate computing. That's because Azure could potentially affect the entire Net, from wonky programs used by companies to run their operations to consumer services doled out to teenagers' laptops and cell phones. While Microsoft has rolled out "live" versions of some of its programs in recent years that had Internet-based features, Azure is designed to be a common foundation on which they will all run. Gartner (IT) analyst David Mitchell Smith says "this is much bigger than NT. It's a tremendously broad and ambitious strategy. This is clearly about more than just competing with Amazon."
A Tip of the Hat to Amazon
That's a reference to Amazon.com's pioneering move into Web services of the sort that many pundits think will threaten Microsoft. The e-tailer rents various elements of an IT shop—basic computing, storage space, access to database programs—to thousands of Web startups so they don't have to invest in their own tech gear. The outsourcing of this wide range of computing tasks is known as cloud computing. "I'd like to tip my hat to Jeff Bezos and Amazon," Ozzie told the crowd. "All of us are going to be standing on their shoulders" in creating cloud-based businesses, Ozzie told the crowd. But Azure will go beyond providing a more efficient means of getting computing done, say Microsoft executives—it will also lead to a host of new services for companies and consumers.
No doubt, Windows is a powerful weapon, if Microsoft successfully uses it to improve its Web offerings. That's because a vast ecosystem of companies and people already know how to create and run Windows-based software. Azure could let them easily extend those programs to the Web. During the presentation, Jonathan Greenstead, CEO of a startup called Sentinent, showed how using Azure could enable his company to reach millions of consumers far more efficiently than if it had to build its own infrastructure to serve them.
But Azure may appeal in particular to providers of corporate software, whose customers have decades of investment in using Windows. For example, Muglia points out that Microsoft can run e-mail programs for corporate customers in its own data centers for a fraction of the cost of customers running the systems themselves. That can free up capital spending dollars and allow staffers to focus on more critical jobs. Lubor Ptacek, an executive at software maker Open Text, which helps companies keep track of various types of information, plans to advise customers to let Microsoft archive older records at its data centers. "In this economy, companies still need to keep their content, but they don't have the money to spend on fancy new storage systems," he says.
Vast Unused Computing Power
Still, Microsoft has a long way to go to prove it can meld Windows and the Web. If it stumbles, Google's more Web-centric approach may gain even greater momentum. It wouldn't be the first time a supposedly invincible technology became obsolete. Just ask Digital Equipment, whose minicomputers were pushed to extinction in the 1990s by cheaper forms of computers, including Windows PCs. Google's pitch: Almost all tech tasks should occur out in the cloud, no Windows necessary.
Microsoft executives say such simplistic visions will never come to pass. Nodding at a reporter's iPhone (AAPL), Muglia sighs: "It's crazy. You've got an amazing amount of computing power in that cell phone, or on the laptop in your briefcase. Why not take advantage of it?"
Many IT chiefs who have invested millions in Windows are likely to feel similarly. Walking out of the expansive hall after the presentation, one IT director for a large utility was intrigued. While most techies knew Redmond was working on ways to leverage its power with Windows to make it more of an Internet star, the idea of being able to tap into an unlimited capacity from Microsoft—say, if a hurricane took out one of his company's data centers—was attractive.
But it will be a long time before any of Microsoft's plans come to pass. "Realistically, you're talking about five to 10 years" before Azure's full impact is felt, said Muglia. So far, all it has done is give programmers at the conference some software tools to begin experimenting with Azure. Actual services won't begin to roll out until 2009. And Microsoft hasn't given any indication on pricing other than to say there will be multiple approaches. Some services will be delivered on a pay-as-you-go basis while others will be tied to various tiers of speed and reliability. Others may make money through advertising.