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Steve Ballmer’s paints Microsoft’s future in Cloud

Posted in The cloud and the open source by Manas Ganguly on March 9, 2010

Cloud computing continues to be big business. Cloud-based offerings pulled in $46.4 billion in 2008, a number that was projected to increase to $56.3 billion in 2009 and $150.1 billion by 2013. Thus the technology is slated to have a 21% CAGR over the near horizon.

Steve Ballmer is busy directing the resources of Microsoft to build its future in the cloud. Quoting Ballmer:
“The cloud fuels Microsoft, and Microsoft fuels the cloud. About 70 percent of the folks that work for us today are either doing something exclusively for the cloud or is inspired to serve the five dimensions that I talked about today. A year from now, that will be 90 percent.”

Ballmer is buoyant with the fresh success of Office 2010. Microsoft Office 2010, due in June, will is optimized for the cloud. Ballmer said. “We’re having some success. For the parts of our Office product that are already in the cloud, about 90 percent of the customers – at least institutions that we work with – choose us.”

Microsoft is moving toward storing data in the cloud as much, or more, than on a user’s hard drive – whether it be the movies that users can download via Xbox Live or TellMe, a voice-driven service that will handle about 10 billion spoken commands this year. The Windows 7.0 will also have the plug inns that will enable it to connect to the cloud. Windows Azure, SQL Azure, Microsoft SharePoint, and Exchange – lie on top of data services and use the smartphones and enterprise computing devices as input. Microsoft is also launching an ad campaign focused on its commercial and government businesses, which stand to benefit from cloud services.

So, then that is about Microsoft’s effort to move and centralize its business around cloud computing. Reproduced below is Steve Ballmer’s memo to the Microsoft group employees which places emphasis on cloud computing as the future for Microsoft. For once Mr.Ballmer you are so right and spot on.

The Body copy of the memo:

Today, I spoke to a group of students and faculty at the University of Washington to discuss how cloud computing will change the way people and businesses use technology.

My goal was to challenge people to look at the cloud more broadly and understand the multidimensional nature of the cloud transformation happening today. Other companies have defined the cloud in a narrow, one-dimensional way. Although these companies provide some interesting components, Microsoft is uniquely delivering on a wide range of cloud capabilities that bring increasingly more value to our customers.

In my speech, I outlined the five dimensions that define the way people use and realize value in the cloud:

• The cloud creates opportunities and responsibilities
• The cloud learns and helps you learn, decide and take action
• The cloud enhances your social and professional interactions
• The cloud wants smarter devices
• The cloud drives server advances that drive the cloud

This view fuels our investments across the entire company, from datacenters to cloud platform technologies to cloud-based development tools and applications. Today, nearly every one of our products has, or is developing, features or services that support the cloud. As I said today, when it comes to the cloud, we are all in. We are all in across every product line we have and across every dimension of the cloud.

Of course, this is not news to any of you. We have been making huge investments in the cloud for the past decade. Nearly five years ago, Ray’s “Services Disruption” memo provided the outline for what we needed to do as a company, and with the delivery of Windows Azure at the recent PDC, we have made huge strides in making this vision real.

To keep our momentum, it is critical that every Microsoft employee works to deliver the full benefits of the cloud to our customers.

As a part of this, I request that you do the following:

• Watch the speech on demand here
• Learn more about our cloud offerings and how they relate to our overarching software plus services strategy here
• Review your commitments to ensure you are landing our vision with customers and partners.

Of course, there is more work to do. We have strong competitors. We need to be (and are) willing to change our business models to take advantage of the cloud. We must move at “cloud speed,” especially in our consumer offerings. And we need to be crystal clear about the value we provide to all our customers.

To drive our message home even further, today you will see an ad campaign in the U.S. focused on our commercial and government businesses, a new website with consolidated content and case studies, and ongoing emphasis on the cloud from me and other members of the SLT in our upcoming speeches and presentations.

We have an enormous opportunity in front of us. We have great products and services in the market today and a range
of new ones on their way.

All of our products make the cloud better, and the cloud makes our products better.


The cost of cloud computing

Posted in The cloud and the open source by Manas Ganguly on August 31, 2009


Featuring an analysis of the top 3 cloud computing companies by Dion Hinchcliffe in terms of current pricing and feature sets.This is probably one of the first time a cost, feature benefit of cloud computing is being examined and from the looks of it this space is gong to get red hot in future.

Lessons from today’s cloud computing value propositions

Taking a look at all this, I’ve come away with five conclusions about the top providers of cloud computing today given their current pricing and feature sets:

  1. Amazon is currently the lowest cost cloud computing option overall. At least for production applications that need more than 6.5 hours of CPU/day, otherwise GAE (Google Apps Engine) is technically cheaper because it’s free until this usage level. Amazon’s current pricing advantage is entirely due to its reserved instances model. It’s also the provider with the most experience right now and this makes it the one to beat with low prices + maturity. However, expect subscriptions from Azure to give it a run for its money when Microsoft’s cloud platform formally launches in a few months (probably November).
  2.  Windows costs at least 20% more to run in the cloud. Both Microsoft and Amazon offer almost identical pricing for Windows instances while Google App Engine is not even a player in Windows compute clouds. There are undoubtedly cheaper offerings from smaller clouds but they are less likely to be suitable for enterprise use, though certainly there are exceptions.
  3.  Subscriptions will be one of the lock-in models for cloud computing. Pre-pay for your cloud to get the most value and you’ll get great prices. But you’ll be committed to providers for years potentially without a way to leave without stranded investments.
  4.  Better elasticity does not confer major price advantages. GAE is one of the most granular of the cloud computing services, only requiring for you to pay for what you actually use (for example, you have to commit to at least an hour of compute time at a time from Amazon) but does not provide a major cost advantage for large applications.
  5.  You can’t pay more for better uptime and existing SLAs are not sufficient for important business systems. It’s unclear why, given open questions about cloud reliability, why no vendors will offer differentiated service where enterprises can pay more for a better SLA. The best you can get right now is also the worst, or 99.95% uptime. This is about 4 hours of expected but unscheduled downtime a year. For business critical applications, this is still too much. This will end up being an opportunity for other vendors entering the space though I expect the Big 3 listed here will improve their SLAs over time as they mature.

Would MS Azure start a new cloud price war?

Posted in The cloud and the open source by Manas Ganguly on July 28, 2009

Earlier today Microsoft unveiled it’s pricing model for its forthcoming Windows Azure cloud services platform. What’s interesting about the pricing model is that they seem to be taking direct aim at Amazon Web Services.

To recap, Amazon charges 12.5 cents per hour for a basic Windows Server instance in contrast Microsoft’s stated that their price will be 12 cents.They noted that the service will remain free until November. I should also point out that it still isn’t clear if comparing Windows Azure to Amazon’s Windows EC2 is a fair comparison given the rather drastic differences in functionality.

Microsoft calls Windows Azure a “cloud services operating system” that serves as the development, service hosting and service management environment for the Azure Platform. They’ve also said they will offer a private data center version of Azure that will be capable of being hosted within a “private cloud” context. This will be most likely as part of their upcoming virtual infrastructure platform “hyper-v” possibly as a virtual machine image. Currently to build applications and services on Windows Azure, developers can use their existing Microsoft Visual Studio 2008 expertise with the ability to easily run highly scalable ASP.NET Web applications or .NET code in the MS cloud.

Microsoft officials had previously indicated that Windows Azure pricing would be competitive, but the price differential may be more symbolic than material. At their published rates, if you ran a Window server in the cloud every hour of the day for an entire year, you’d save a mere $43.80 going with Microsoft. Indeed, if penny pinching is important, Amazon Web Services actually has a cheaper alternative, though it’s not Windows. Amazon charges 10 cents per hour for “small” virtualized Linux and Unix servers.”

The half cent price difference is quite certainly material for those running larger cloud application deployments. A few cents can quickly add up. The move indicates that Microsoft is certainly not afraid to subsidize its cloud pricing in order to take a larger piece of the cloud market and with the large cash reserves Microsoft is said to have, they can certainly afford to engage in a price war. The bigger question will be how other more closely related cloud platform providers will adjust their pricing models? Right now all signs are starting to point a cloud price war. Time will be the best judge!

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