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Everyone suspected that Windows Azure was not a blazing success. Now the official stats seem to suggest that it is pretty much a failure.

Microsoft does not tell the exact number of users it has on their cloud platform – Windows Azure, however a couple of day ago we got the latest vague estimate from the company. Quoting Mary Jo:

“On May 8, Microsoft Corporate Vice President of Azure Marketing Bob Kelly provided Merrill Lynch Technology Conference attendees with another tally tidbit. Kelly said Microsoft now has “high tens of thousands of customers” for Windows Azure.”

That was it, so now let me try to interpret what we have heard:

  • I assume that “high tens of thousands” means 50,000 to 100,000 customers,
  • Is that for paying customers or does that include free ones? I assume that if they were paying – Bob would have told us so,
  • Does that include Microsoft’s own teams? Probably, yes. Microsoft teams traditionally view other teams within the company as “customers”,
  • If I have a team of developers working on a project – do these get counted as 1 customer or multiple customers? If everyone is counted the number would have to be divided further. I would assume that the answer is 1 – otherwise, considering that SaaS development and operations are team efforts, the resulting number would get too small.

Now, let me be straight on that, if these assumptions are right, this is a very small number for a platform that was publicly launched in October 2008.

Just to put that in perspective, the company for which I work now – Jelastic (Java PaaS) – launched public beta in October 2011 and last month announced 15,000 signed-up users (including free, trial and beta).

As much as I love our marketing team, the marketing resources that we have are minuscule compared to that of Microsoft, so considering all the efforts that Microsoft made touting Azure everywhere and all the .NET developers their marketing can reach – Bob Kelly’s number is incredibly low.

The previous datapoints that Mary Jo quotes are in line with the current number:

“In 2010, the Redmondians said they had 10,000 Azure customers. In 2011, it was 31,000. (Microsoft officials declined to say if any of these were Microsoft users and how many were paying customers.)”

I have a lot of friends at Microsoft and a lot of sympathy toward the company, so I really hope that some of the assumptions that I made are wrong. If so, I think Microsoft should be more transparent about the way they count “customers”. Giving the number and then letting everyone make their best guesses on how it was counted – is a very bad tactics. People just assume the worst case scenario and this damages, rather than improves the company image.

 

With the recent changes in the leadership of one of Microsoft’s key business units – Server and Tools – from Bob Muglia to Satya Nadella one can’t help speculating what this means for the business unit and how it will affect Microsoft’s cloud strategy, specifically Windows Azure – Microsoft’s platform as a service.

Here’s my uneducated guess based on the assumption that given a new task humans tend to use the same approaches which worked well for them last time, and that Satya definitely got this post as a recognition for successfully rolling out Bing and transforming Microsoft’s search business from nothing to a competitor really frustrating Google.

Here’s what I think Satya will bring to Microsoft’s Server and Tools Business:

  • More focus on online (Azure) than on Windows Server: Bob Muglia made Windows Server business a success, this was his kid, while Windows Azure (one could argue) was kind of a step-child, imposed on him and added to his business during a re-org. Satya will likely feel much different: for last few years he has been “living in the cloud” leading Bing, and Steve Ballmer very explicitly made lack of cloud focus the reason for changing the business unit leadership.
  • Compete against the market leader: Bing clearly was developed to compete against Google. I guess this means that now Azure development will become aggressively anti-Amazon.
  • Acquisitions and partnerships: so far Azure has really been a ground-up effort by Microsoft engineers, Bing team tried to buy Yahoo, and when this did not work hired a lot of top talent from Yahoo and finally essentially acquired its search and ad business. Satya was directly involved in these efforts. So who is a runner up in IaaS business who Microsoft could acquire to get more visible in that space? Rackspace? Savvis? Although, one could argue that search share was more relevant in search advertising business in which the big get bigger (why even bother advertising with small players?) and this advantage of scale is not as relevant in hosting, so acquisitions might not be as effective. We will see…
  • Not sure if Azure appliance emphasis will persist: Azure appliance made a lot of sense under old leadership. Server and Tools Business knows how to sell to enterprises, so let’s turn Azure into an appliance which we can sell to our existing biggest partners and customers. Will Satya feel the same? I don’t think Bing folks were paying much attention to Microsoft’s search appliance strategy leaving this all to SharePoint/FAST and concentrating on pure cloud play…

There were speculations after Ray Ozzie left that Azure might get de-emphasized – after all Azure was one of Ray’s pet projects. With Satya’s appointment, I would say that we should expect Azure to only gain priority at Microsoft. We’ll see how applicable will Bing experience be for making Windows Azure a top player in the cloud platform space.

Burgeoning application stores satisfying any possible consumer need seem to be the number one reason for the incredible success of products like iPad tablets and iPhone and Android smartphones. What is it that does not let Microsoft provide the same application distribution for Windows consumers? Surprisignly, it increasingly seems that Microsoft has all the technology it needs and it is a matter of just connecting the dots rather than dramatically changing the way that the operating system is designed.

Let’s see of what it would take to get a Windows Marketplace rolled out. There is actually not that much involved – Microsoft is almost there:

1. Popular platform – it is the exposure to consumers that makes marketplaces attractive to developers. There are more applications created for iPhone and Android than for, say, Palm WebOS simply because there are more iPhone and Android users so a bigger addressable market. With the 91%+ marketshare that Windows still enjoys – I bet you can put check for that one.

2. Developer community and tools – again – clear check here: there are many .NET developers out there and Microsoft’s development tools such as Visual Studio are great and spawn all groups of developers from enthusiasts who can download Express edition for free to big teams which can get all the high-end features one can think of.

3. Marketplace application or portal – you know the actual site with stars, reviewers, popularity index, ability to buy an application, application submission process and so on. Microsoft clearly did not have this a year ago – but guess what – now they do. Windows Phone 7 Marketplace is launching and all the technology and processes used there are going to be totally applicable for any application store. Another check.

4. Application and data isolation – this is probably the hardest one. Windows was not designed with portable applications in mind, and if you really want applications to be easy to find, install, use, upgrade and remove you really need each application to be self-contained. Each application on iPad or Android comes with all it needs, can self-update and can never affect any other installations.

Windows on the other hand was designed as a file-oriented operating system in which you have the files: some with data such as your pictures or documents and some with with executable code – and all of them, as well as application and user settings in the Windows registry – are shared among applications and introduce potential dependencies and ability to negatively impact the operating system and other applications.

So is Windows hopeless? Not at all! Microsoft actually owns application isolation technology it acquired back in 2006 (more than 4 years ago!) from SoftGrid – called Microsoft Application Virtualization or App-V. It makes all applications totally isolated from others, not affected by any compatibility issues, easily upgradeable and removable. And it even natively supports streaming of the application packages from network. So what is the reason why it has not revolutionized the way we run applications on our PCs?

Seems like the Microsoft’s size and org chart are the answers. App-V is part of Systems Center (Microsoft’s division selling management tools to enterprises) and not Windows client OS. And it is not free either – and even enterprises only get it if they buy Microsoft Desktop Optimization Pack or Microsoft Application Virtualization for Terminal Services.

Seems to me that if Microsoft really wants to fight the iPad and Android tablet battle and not let Windows get marginalized to professional workstation use only this needs to be changed. App-V should be made a standard component of Windows 8 and App-V package creation tools standard part of developer tools.

That, in combination with a more touch-oriented graphical user interface and nice hardware from partners, will immediately make Microsoft big in the consumer tablet market – which seems to be the consumer PC market of the future.

Come on, Microsoft! You are almost there. Just make the teams talk and make it happen.

private-cloudMaybe not just yet unless you are an extremely large hosting company or enterprise with big IT and research and development (R&D) budgets.

To re-cap, this week at its Worldwide Partner Conference (WPC) Microsoft announced that together with their hardware partners they will start offering (some time later this year as a limited release for folks like Dell, HP, Fujitsu and eBay) Azure containers basically giving others the ability to run pretty much what Microsoft is running in their own public Windows Azure cloud datacenters.

This is an important move from Microsoft which they kind of hinted in the past and something we expected them to do back in 2009. Microsoft is not the only hosting company in the world, and there are governments and enterprises who – for security and other reasons – are continuing to invest in their own datacenters – these are big markets which Microsoft wants to address and not let go to VMware and other competitors.

However, the biggest drawback which all observers seem to be missing is that while Azure technology stack is similar to regular Microsoft Windows/IIS/SQL/.NET stack, it is not completely identical. You just cannot take an existing Windows Server application and point it to Azure. Even Microsoft’s own flagship server applications such as Exchange, SharePoint and Dynamics CRM and ERP systems do not run on Azure. Applications actually have to be ported to Azure which is certainly doable but does require R&D efforts on the side of application creators.

Today the set of applications available for Azure is so limited that I can probably count them with my fingers: Microsoft ported their SQL database, SugarCRM just released an Azure version of their tool, Quest Software has a set of cloud-based management services for administrators, and FullArmor has a beta of their endpoint management tool.

Maybe there is one or two other application that I missed – but you get the story. As of today, even if you get an Azure container (and you actually have to buy one – you will not be able to re-purpose the servers you already have) – there is not much you will be able to run on it.

For eBay this maybe worth it – they have their own custom-developed application and big budgets for developing and improving it. For most other folks out there – applications need to come first and make private Azure valuable enough. I am not saying that this will not happen – folks in Redmond are doing their best to recruit their partners to form the Microsoft cloud ecosystem – but we are definitely not there yet.

Windows-from-the-cloudPundits talking about how Windows 7 is all about Microsoft competing against Apple, recovering with Vista consumer adoption disaster, or getting people off of XP, are missing one other – extremely important – part of the Windows 7 story. Windows 7 and its server counterpart – Windows Server 2008 R2 – are actually the first real step in Microsoft’s Windows Cloud Story. Before Windows 7 Microsoft could offer some services (such as Exchange Online) from the cloud – but could not provide full enterprise directory, security and so on – now they can.

Microsoft has always called their SaaS plan Software + Services, emphasizing that they can enable rich Windows and application experience over the internet. The reality however has been that in most cases these have been limited to a few web-enabled (e.g. Outlook) or pure web (e.g. SharePoint) applications. Most Microsoft systems and their whole enterprise security model rely on Active Directory and intranet network connectivity – neither of which work should the directory be located in Microsoft’s datacenter.

Now Microsoft has actually quietly added a few key features enabling this scenario:

  • Offline Domain Join – customers can now have add their computers to Active Directory without ever having them in the same network (by importing special security key they get from whoever is running their domain.)
  • DirectAccess – end users can log into their domain and access any services (including even file servers) without having to VPN into the network and there is a way to automatically enforce their patch and antivirus level using Network Access Protection (NAP – the feature they added in Vista which now really shines when added to DirectAccess).
  • Active Directory Management over Web Services – even administrative tools: both graphical and command-line – got revamped to work over web services instead of traditional direct connectivity.
  • To say nothing about much improved Remote Desktop Services, application streaming, Virtual Desktop Infrastructure and so on. There’s definitely some pattern here!

With these technologies, Microsoft will actually be able to run your entire environment in their datacenter, yet let users securely connect to that environment from their own Windows machines.

This is a pretty important step in fighting the Web 2.0 approach of Google and the like which are suggesting that all your applications are going to be replaces with in-browser web counterparts like Google Apps. And obviously Microsoft’s approach has the potential of providing a much more familiar and evolutionary way of outsourcing your IT than radical “we’ll find everything on the web” way.

It is also fascinating to see that Microsoft is not yet positioning these technologies as hosting enablers. Their documentation lists them as advances for enterprise own administration. Yet, administrators find them quite hard to discover and set up. My guess is that this is because, as I mentioned above, these feature are not really for customers but are for hosters – most importantly Microsoft – and Microsoft is simply not ready yet to publicly announce their next generation services which make use of the features.

My gut feeling is that we will hear about them pretty soon. Time will tell.

azure-leaving-home1It’s official: Microsoft partners will be able to run Windows Azure too.

The news was broken by Microsoft’s general manager of business strategy for cloud infrastructure services Doug Hauger this Wednesday as he spoke at the Thomas Weisel 2009 Technology and Telecom Conference in San Francisco.

I quote from ENT News:

“This is a beautiful partner opportunity, where separate from the [Microsoft] Azure [IP cloud computing] platform…we could help them with our technologies in their data centers and they could then provide that cloud service,” Hauser said. “That is a perfect partner opportunity in this space.”

This is a big departure from the initial statements from Microsoft on Azure only being available from the Redmond company’s own datacenters.

While no timing has been announced, this is a great step by Microsoft, enabling its partner ecosystem and making its position quite strong in competition with VMware’s vCloud which used to tout this partner approach as one of its key differentiators. So looks like this prediction we made on Jan 1 is already coming true:

The interesting aspect of that is that VMware really has the potential of forcing Microsoft to let partners run Azure. Today this is not the case and the only place where Azure exists is Microsoft’s datacenter.

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Microsoft's Gen4 DatacenterSeems that Microsoft is suddenly surprisingly extremely open on how they design and run their datacenters. Not only we have a write up by Michael Manos on their Generation 4 datacenter architecture (and a great concept video), but even more surprisingly James Hamilton is giving us a spreadsheet of their datacenter expense structure!

Can you find information like that for Google or Amazon? The answer is no. Because the way they run their datacenters is a part of their competitive edge – especially for Amazon who compete at the infrastructure level where low pricing is important so efficiency is paramount.

Why would Microsoft do that? Apparently these blog posts are not just something individuals put out but a concerted move by the company. My guess is that there’s not much they loose now by giving away that information: after all they are not really a player in that space today (Live is way behind Google and Windows Azure is at a very early stage), and even a smaller vendor going after Microsoft would like to mimic their approach achieving the same economy of scale and competing against Microsoft is not going to be that easy.

However, the posts intent to help establish Microsoft’s credibility in the space (despite Hotmail success and a lot of other online efforts, the software giant is not really viewed as a web 2.0+ company). The message is: we are very serious about this market and this transition, and we are innovating and leading the industry to some kind of next generation approach leaving others behind.

We’ll see how this all plays out. Meanwhile do check out the links if you have not done so yet:

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The posts on this blog are provided “as is” with no warranties and confer no rights. The opinions expressed on this site are mine and mine alone, and do not necessarily represent those of my employer Jelastic or anyone else for that matter. All trademarks acknowledged.

© 2008-2012 Dmitry Sotnikov

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