Ballmer To Partners: We're All About Cloud, You'd Better Be Too

“This is a scary move,” Ballmer said, acknowledging that cloud computing represents a marked change in business models for both Microsoft and solution providers. But he said: “If you don’t want to move to the cloud, then we’re not your company.”

“It’s a change that allows us all to deliver new business value,” said Ballmer.

Ballmer’s keynote came as Microsoft unveiled new cloud computing products and services, including a Windows Azure appliance that Microsoft partners and their customers can use to build private cloud systems based on Microsoft’s Azure services.

About 9,500 Microsoft partners are attending this year’s WPC in Washington, D.C.

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Much of Ballmer’s keynote was devoted to “the opportunities and the responsibilities” cloud computing creates for Microsoft and its channel partners. Today there are more than 10,000 paying customers for Windows Azure, which went live five months ago and is used by such companies as Starbucks, 3M and GlaxoSmithKline.

Ballmer said cloud computing is no longer at the experimental stage for many businesses. “This opportunity is real and concrete and available to all of us today.”

In a later keynote, Stephen Elop, president of Microsoft’s Business Division, sought to dispel the idea that channel partners can’t make money reselling Microsoft services. He cited a study the company made of 40 sales contracts for Microsoft Online Services through channel partners (average deal size $24,000) and concluded that each generated $167 per seat in revenue for solution providers. That included $35 per seat for providing managed services such as desktop management, $66 per seat for business consulting and customization work, $46 per seat for migration and integration services, and $20 per seat for provider-of-record fees.

“It is no longer a question of if, but when our customers should move to the cloud,” Elop said. “Increasingly our customers are purchasing suites of online services. Customers are speaking with their wallets.”

Ballmer used his speech as an opportunity to strike back against critics who argue that thin clients and mobile devices will dominate in a cloud-centric world with no role for desktop PCs -- still a core part of Microsoft’s business. “I don’t believe the cloud is a place where thin clients will take over,” he said.

As far as client devices are concerned, Ballmer said the company would aggressively push Windows 7 and Windows Phone 7 for tablet computers and smartphones, respectively. “This is a terribly important area for us. We really have to push this as a Microsoft perspective,” he said.

A number of manufacturers, including Dell, Samsung, Toshiba, Sony, Lenovo and Hewlett-Packard, are developing Windows 7-based tablet or “slate” computers to compete with Apple’s iPad. Likewise, Ballmer named HTC, Dell, Samsung and LG as companies that plan to use Windows Phone 7 in upcoming products. In a moment of candor Ballmer admitted that Microsoft “missed a generation with Windows Mobile,” its earlier mobile operating system.