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.


In this article in Enterprise Systems Journal I argue that this might very well be the case.

Here’s a quick excerpt:

IT professionals seem to be the most conservative crowd when it comes to the cloud. While we all have been uploading our pictures to Flickr and communicating via Facebook, and our sales reps have been utilizing and doing Web demos, system administrators have stayed cautious, preferring to keep IT under their control.

Now that software as a service (SaaS) has become more widespread and commonly accepted — and C-level executives are falling under the charm of the cloud — something’s got to give. That’s definitely the expectation of the systems management vendors quickly ramping up their acquisition and development cycles to have SaaS for IT management products ready.

Read the full text here.

Is there hard ROI to use a cloud IaaS instead of a server in your garage/basement/on-premise datacenter? I think there increasingly is and justifying self-hosting is getting increasingly tough.

I would actually go as far as posit that you can now get a server in a public datacenter at price comparable to your electricity bill alone!

If you don’t believe me – let’s do a quick math.

Mark Kolich noticed in his blog that the server he had running at his home was consuming 220 W, which at the consumer electricity costs of 12-cents per kWh means:

0.220 kWh * 12 cents = 2.64 cents per hour

Almost 3 cents/hour for electricity alone not taking into account: labor, server hardware amortization, data-storage costs (replacing a failed disk), cooling costs, ISP costs, security costs (routers, firewalls, etc.), power backup costs (a UPS) and so on. Mark notes that he could have probably bought a newer more energy efficient server – but the required investment would not justify the savings.

The shocking part is that the recent price competition of cloud infrastructure (IaaS) and platform (PaaS) vendors took the current cloud servers costs to roughly the same order of costs. Here’s a quick survey of a few major cloud players:

  • Microsoft is rolling out their 5 cent/hour option (with additional further discounts if you pre-pay for reserved use – e.g. say you have a bunch of instances which you have running all the time and you are willing to pre-pay for the next few months).
  • Same thing with Amazon: minimal price (although for a slightly more limited version) is already in 2 cent for Linux / 3 cent for Windows instance area, with reserved/pre-paid option getting as low as 0.7 cents/Linux & 1.3 cents/Windows.
  • Rackspace pricing starts at 1.5 cents/hour for Linux, and 8 cents/hour for Windows.

My take on these numbers is that you need to have a really good reason to go into hosting when there is so much price competition in that space and the margins are going down so fast.

The only good reason I can think of is hosting being your competitive advantage in some way. For example, being a local hosting company in a country which legislation is making it hard to use foreign datacenters. Or offering some level of compliance which public hosters cannot provide. And as a matter of fact both of these differentiators are gradually going away with the vendors quickly getting all the possible certifications and compliance stamps you can think of, as well as opening datacenters around the globe.

Cloud is cheaper than your own hosting regardless on how you calculate the costs. Get used to it.


Marco Arment from Instapaper thinks that Chrome OS will have limited appeal for consumers, will target businesses and not be well-received there due to lack of proper enterprise support and commitment. Here are a few quotes from Marco:

Google’s targeting of Chrome OS is interesting. Rather than trying to attract consumers, who have demonstrated that they’re not interested in “Net PC”-like browser-only hardware, Google is positioning Chrome OS hardware as inexpensive, low-IT-overhead alternatives for businesses to deploy instead of desk computers.

In last week’s Talk Show, John Gruber and Dan Benjamin discussed why it may finally be a good time for this: a lot of computers today in businesses exist solely to run a web browser. John’s example is almost every computer in a typical bank branch, on which the agents usually just type your information into a series of web-browser forms in order to do their jobs.

Google’s just not in the business of providing long-term support for an unsuccessful product line. It’s part of what allows them to keep releasing new things all the time while geeks declare Microsoft a boring old dinosaur. But IT departments need their platform vendors to behave much more like Microsoft.

I doubt many corporate IT execs are going to take the risk that Chrome OS will be a stable enough long-term platform to deploy to their companies’ workforces. As the saying goes, nobody ever got fired

Interesting enough, I actually agree with the second part of the argument but not with the initial premise.

Yes, getting businesses to commission big desktop refreshes to Google is going to be a challenge and require good field execution to get the early adopters buy into the value proposition (and then serve as a case study to persuade the others). And I think existing Google Apps adoption and progress demonstrates that Google’s execution when pitching to the enterprise is underwhelming. Just think on how much earlier on the market they got compared to Microsoft’s BPOS/Office 365 and how they almost missed this advantage.

However, obviously, even if not that many enterprises adopt Google Apps and Chrome OS – the reality is that these will create a headache for Microsoft because they will be used as a threat buy Microsoft’s enterprise customers when negotiating a better deal on their Microsoft contracts…

The real success of the OS though is likely going to depend on the consumer adoption (iPad was never pitched as an enterprise tool – but companies are increasingly looking to using it as such). So let’s look at the possible consumer play of the technology.

And here, I do not agree that ‘consumers … have demonstrated that they’re not interested in “Net PC”-like browser-only hardware’. Consumers are not interested when you give them a crappy netbook with an impossible to use Linux. There is little doubt about that. However, this does not mean that consumers are attached to Windows fat apps either. Success of iPads is a clear demonstration that consumers can live with total breakage of compatibility with old apps as long as the device is great and the new apps ecosystem is good.

If the application marketplace which Google is launching for Chrome OS is good – it will be just fine with consumers. Especially with supported offline mode and printing. I am using TweetDeck Chrome app in my Chrome browser today and it is just a great application. Much better, faster and easier to maintain than the AIR version I used before. If apps, hardware and pricepoints are there – consumers will come.

And yes, Ray Ozzie is right: applications on any devices are these days becoming a local representation and cache of something server or cloud-side. This is already true for a lot of iPhone and Android applications – so web-based application framework with good access to local resources is fine. Which then makes it a question of whether Google can make the Chrome OS the device operating platform of choice for the range of devices and longer term replacement of Android. And this is a question of competing for the hearts and minds of consumers and developers – and not really a question of a “Net PC” being something that resonates with consumers.

And I have no idea whether or not Chrome OS devices require cheaper hardware than Android devices. I am not sure I see why they would – consumers would probably still want solid-state drives, nice-looking form-factor, touch screens, cameras and other things which make the devices more expensive – so what’s the difference?

The future is in the cloud. Whether this “cloud” means Chrome OS remains to be seen.

The Experts Conference 2011: Advanced Training on Cloud Technologies for Enterprise IT ArchitectsWhat do enterprise IT architects need to know about the Cloud? What is the difference between SAML and OAuth? Can you really host an AD domain controller in the cloud? How do you enable single sign-on (SSO) between Active Directory and Microsoft’s Office 365 or Google Apps? What is the state of art for security and compliance in the cloud?

These are just some of the questions which are probably going to be discussed at The Experts Conference 2011 in Las Vegas, April 17-20 2011.

If these questions are relevant to you – register today and get the early bird discounts.

If you are an industry expert willing to present at the event on one of the topics I listed above or a related cloud topic – you still have a few days to submit a session proposal here. You can also contact me for more information or assistance in submitting your session proposal.

Cloud can make your environment *more* secure. A new cloud service alerts IT pros when specific events happen in their environment. For example, you might want to receive an email when a sensitive resource gets accessed, certain permissions get granted, membership for a privileged group gets changed and so on. This all is now part of the Quest OnDemand Log Management service – just watch this two-minute video to see how it works:

(Full disclosure: I work for Quest Software and participate in our Quest OnDemand efforts.)

What’s best is that this is a cloud service – so no local deployment or additional infrastructure is required. You can just go to the website, sign-up for a free trial, download a small agent, and start getting alerts for the events you care about!

Cloud is good for you! Sign-up for a free trial now and have the cloud help you keep your environment secure.

The Department of Health and Human Services headquarters by the National Mall, image from wikipediaIt bugs me that for some irrational reason there is still a common-sense believe that data is more protected when kept in someone’s own datacenter and not with a trusted cloud provider.

US Department of Health and Human Services (HHS) has just published data on past year data breaches in the medical industry. These only include breaches affecting 500 or more individuals and reaching the “harm” threshold defined by the current rules. Yet, there 166 of those affecting the total of 4,905,768 patients. does a good job analyzing the breach data, and you can see that even in the industry which is highly regulated and paranoid about data security and privacy – data being stored locally is getting stolen or lost all the time.

Compare that to a cloud provider (pick any cloud service which you like:, Microsoft BPOS, Amazon, Google Apps, Quest OnDemand) – have you heard of 166 breaches for any of those? There are good reasons why you have not:

  • High security standards of the datacenters: a lot of these are compliant with SAS 70 Type I and Type II and ISO/IEC 27001:2005 – does your datacenter get formally certified that high?
  • Clear segregation of duties: people running the datacenter are not your employees, they have no idea what kind of data is getting stored by who and no vested interest in seeing that data,
  • Needle in a haystack effect: public clouds have multiple customers, so even if a squad of ninjas attack the datacenter and manage to steel a harddrive it will just have some bits from data from various customers in format specific to a particular application and probably encrypted – making the whole exersize completely meaningless,
  • No local device data: your local laptops or mobile devices only work with remote cloud data – so if the device gets lost or stolen you loose the device, not the data.
  • Security is in the cloud business model: for any credible SaaS vendor security is number one concern (see for example Quest OnDemand security FAQ). They implement specific security measures such as data isolation, audit trails, and so on.

It is just incredibly hard and costly to set all these measures and maintain them, and I find it hard to see how (apart from really select few companies) these days will have the resources to provide that level of protection and security for on-premise systems. Cloud makes things more secure. Cloud is good for you.

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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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