Windows Azure, Azure, Microsoft
Ric Francis/AP
Ray Ozzie, Microsoft's chief software

Cloud Computing Race Heats Up With Microsoft Entry

October 29, 2008 02:40 PM
by findingDulcinea Staff
What does Microsoft's new Windows Azure platform mean for the fast-growing online software business?

'Windows for the cloud'

Windows Azure was unveiled on Monday at the Microsoft Professional Developers Conference in Los Angeles.

Azure is one of the latest entries into the red-hot cloud computing arena, where Google and Amazon have already established themselves. The day after Azure was introduced, Yahoo announced Zimbra, its own offering in the cloud computing field. Zimbra is a collaboration suite for educational institutions.

Microsoft Chief Software Architect Ray Ozzie describes Azure, which will be made available when Windows 7 is released, as "Windows for the cloud." Cloud computing makes use of data and applications that live on the Internet instead of on individuals' computers. Microsoft is predicting that more and more people will want to store data such as photos and videos on a "cloud" of data centers online that can be accessed anywhere.

After analyzing current trends in computing, Microsoft concluded that "there was this new role for this new third tier of computer in the cloud. You've got your personal computing tier, you've got Windows servers for the enterprise tier serving the enterprise, and now this computer in the cloud serving this whole worldwide Web," said Ozzie during an interview with IDG News Service.

The growth of cloud computing, in addition to creating an investment boom by Google Inc., Yahoo Inc. and Inc., is creating new opportunities for computer hardware makers, reports CNN. Dell Inc., Hewlett-Packard Co. and International Business Machines Corp. are all developing products to support the new infrastructure that cloud technology will require. Microsoft is using specially made, high-density Dell servers to power the data centers for Azure.

Opinion & Analysis: 'Amazon Is King of Cloud Computing'

Tim Beyers of the Motley Fool has anointed as the leader in cloud computing, citing recent endorsements from Bill Gurley of Benchmark Capital and Ozzie of Microsoft. Gurley has said that he bought shares of Amazon, which he predicts will become a low-cost leader in the online software sector. While introducing Azure on Monday, Ozzie remarked that "all of us are going to be standing on [Amazon's] shoulders.”

But Beyers is also banking on Azure, which is similar to Amazon's Elastic Compute Cloud. "I sense the potential for a winner here. Why? It's disruptive technology. Think about it. The twin promises of cloud computing are (a) cost savings and (b) platform freedom. Windows Azure could fulfill both while preserving the hard work developers have put into creating software for Windows, SQL Server, and other Microsoft technologies. Call it a strategy for platform preservation," Beyers writes.

Zoho CEO Sridhar Vembu compares Microsoft, Google and Amazon in terms of gross profit, a company's revenue after paying outside suppliers, and net profit numbers. Vembu concludes that Google and Microsoft are on another plane altogether in terms of gross profit, compared with Amazon.

"Microsoft's announcement is interesting from a technology point of view, but it is hard to see how the economics would work for them against Amazon,” Vembu writes. “It is very hard for companies to go down the value chain for growth, so I am skeptical Microsoft would easily accept Amazon-like margins. On the other hand, for Amazon, cloud services have to deliver only a little higher margin than retail to be well worth the investment. That is not a tough hurdle, because retail is one of the toughest businesses out there."

Key Player: Debra Chrapaty

Debra Chrapaty, the corporate vice president of Microsoft's Global Foundation Services, is responsible for the data centers that will run the Azure cloud services. Dubbed by eWeek as "The Woman Behind the Microsoft Cloud," she will be in charge of making sure that the cloud stays running 24/7. "[M]y organization was the first to use the Azure environment and test it," she told eWeek.

Related Topic: Google Releases New Web Browser, ‘Chrome’

Reference: Personal computers


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