The New Microsoft And The New Cloud

| About: Microsoft Corporation (MSFT)


Microsoft may have more than a new CEO as it articulates a bolder, broader vision of enterprise computing and the role it could play in the coming cloud transformation.

Outgoing CEO Ballmer deserves credit for at least cultivating the Azure zeal.

The future may be defined by how well it can execute on its very powerful vision.

When it comes to the emerging multi-billion dollar hybrid cloud market, Microsoft (NASDAQ:MSFT) is becoming more than a force to be reckoned with. It is articulating a powerful vision, one that is increasingly well-grounded in the Redmond giant's core expertise and global data center footprint. Some call Microsoft's advantage "enterprise DNA" but I think that may prove to be an understatement.

As we enter 2014 Microsoft and VMware (NYSE:VMW) are both promising to give Amazon's AWS (NASDAQ:AMZN) public cloud service a formidable challenge, along with OpenStack adoption at service providers and large enterprises. Microsoft, however, is in a remarkable position that gets more interesting by the month.

Talking Hybrid Cloud with Microsoft

Earlier this month I was able to talk to Microsoft's Brad Anderson and Mark Russinovich, whom are among key execs leading the charge for Azure. We spoke on a cold, windy morning on a Pioneer Square rooftop about Azure's rapid growth and maturation, in front of a few cameras for an upcoming video project on hybrid cloud.

We talked about Microsoft's focus on delivering agility to the enterprise, through the development of tools that reduced the amount of effort required to leverage cloud infrastructure for storage, development and infrastructure. I asked Brad and Mark about what has led to the evolution of cloud from a purely public model to the hybrid model and what that will mean for the enterprise adoption as well as what they see as the top priorities or considerations for hybrid cloud deployment.

The video will be shown at the upcoming (and sold out) Build Conference. Later that day I spent a few hours with Microsoft execs responsible for SQL server marketing and mobile device management.

A very clear and articulate picture emerged of a company on a bold new path, looking to the future versus simply extending and monetizing the past. The new Microsoft looked like a company focused on the development of an unprecedented cloud platform across form factors (and multiple clouds) that would enable new levels of IT agility: the cloud as a seamless extension of the device and the data center.

Several companies have articulated a similar vision, yet Microsoft seems intent on really pulling it off. I didn't come to this conclusion based on a single visit, but rather on a series of public moves and a growing pool of conversations.

Almost a year ago I had the opportunity to meet with some of the Azure senior technical team as a part of a partnership program, and it felt like a hot startup percolating within the core of a massive campus. See, for example, Azure and the Hybrid Cloud Race (June 2013).

From my perspective this was followed by briefings with other Microsoft and industry execs and ultimately the appointment of Satya Nadella as the new CEO, replacing Steve Ballmer. While Ballmer has faced more than his share of critics for missteps (albeit across decades of massive disruptions in multiple tech categories where Microsoft had a presence), the tempo and drive of the Azure team was no doubt established on his watch and under his tutelage. And the appointment of Satya may also be part of his enduring legacy as a hard-driving competitor.

Indeed the Microsoft of today may be more stronger and more entrepreneurial than it has been in decades.

Satya comes from the services side of the business and area of strategic interest as Microsoft looks forward to the next three decades and what changes are in store. The return of Bill Gates as a philanthropist tackling global issues like poverty, education and healthcare is also a stark contrast to the "monopolist" persona of the desktop and server-centric era.

I think we are seeing the emergence of a nimbler, service-centric Microsoft with more emphasis on passion than power, solutions over products and agility over lock-in. If they can pull it off, they could craft a different kind of dominance in IT, one driven by empowering versus containing their customers' visions.

According to Microsoft, Azure is now adding more than 1,000 customers per day (no revenue data offered), and Azure is doubling capacity every six to nine months. The software powerhouse also advised that Azure has penetrated (in one form or another) more than 55% of the Fortune 500.

Clearly Microsoft has its work cut out for it, with Amazon's AWS driving the public cloud to new heights and with VMware's high profile entry building on its strength in private (virtualized data center) clouds. Google (NASDAQ:GOOG), as well, recently announced sizable price cuts for its own cloud service. Networking stalwart Cisco (NASDAQ:CSCO) has even entered the fray with an intercloud vision centered on OpenStack.

Form my visits with key execs the Microsoft of the cloud era seems a much different company, articulating and delivering upon a new vision rooted as much today in agility as it was once rooted in control. As next week's Build Conference plays itself out, all eyes are on Microsoft at this key moment in the enterprise IT revolution. The question: How fast can it deliver on this very powerful vision?

(Disclosure: CloudVelocity is an Amazon AWS and Microsoft Azure partner.)

Disclosure: I am long MSFT, AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Travel expenses for my trip to Seattle were paid by Microsoft. My employer, CloudVelocity, is a Microsoft and Amazon partner.