Microsoft Stakes Its Claim As Top Dog In Enterprise Cloud Market

Microsoft didn't have first mover advantage in the cloud, nor is it the most innovative player out there. But when it comes to selling cloud to enterprises, Microsoft believes it has an unassailable position.

At a press conference Monday in downtown San Francisco, Satya Nadella, head of Microsoft's $19 billion Server and Tools unit, talked up a coming wave of new and updated products and services, some of which are designed to let enterprises mix and match private and public cloud infrastructure.

By blurring the lines between the two, Microsoft says customers can work more efficiently. As it turns out, mixing private and public cloud also highlights the depth of portfolio that Microsoft sees as a key advantage over Amazon, VMware and other cloud rivals.

[Related: Microsoft Clears FedRAMP Hurdle, Sets Sights On Big Government Cloud Deals ]

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On the private cloud side, Microsoft plans to start selling Windows Server 2012 R2 and System Center 2012 R2 on Oct. 18. Microsoft's Windows Azure Pack, a free add-on that brings public cloud elements like self-service and multitenancy to Windows Server private clouds, is also included.

Microsoft is also partnering with Equinix, a Redwood City, Calif.-based service provider, to let enterprises have peering arrangements between their data centers and the Windows Azure public cloud. This means enterprises can mix and match private and public cloud infrastructure as they see fit, Nadella said at the event.

For example, a company could stand up a Windows Server private cloud and use Azure for backup and disaster recovery, said Nadella.

Windows Azure is becoming increasingly connected to other Microsoft products. Xbox Live, Halo, Office 365 are powered by Azure services like Active Directory, and Microsoft's Halo team is developing on the Azure cloud and using it for in-game analytics, Nadella said.

However, some enterprises haven't yet worked with Azure, so Microsoft is dangling a licensing carrot. On Nov. 1, Microsoft will debut a new Enterprise Agreement that lets customers get discounted Azure prices with no upfront commitment or overage penalties.

Previously, EA customers had to commit to buying $25,000 in Azure capacity up front on an annual basis, and if they didn't use it all before the year was up, they were out of luck.

"With the new agreement, the customer gets to pay only for what they spend, and they get their enterprise agreement discount," Matt Scherocman, president of Interlink Cloud Advisors, a Cincinnati-based Microsoft partner, told CRN. "This will make it much easier for a client to get started in Azure and start to see the value and how it could impact their business."

Microsoft is going hard after government cloud customers, and Windows Azure last week received preliminary approval from the Federal Risk and Authorization Management Program (FedRAMP).

With Windows Azure U.S. Government Cloud, a new version of Azure aimed at federal government customers, Microsoft is trying to keep the momentum going. "It's a separate instance of Azure that is isolated logically and physically," Nadella said.

NEXT: Microsoft's Big Data, Mobile Device Management Plans

Later this month, Microsoft will release an update to its Dynamics CRM Online service, which comes with a redesigned, more touch-friendly user interface.

Reed Wilson, founder and president of Palmetto Technology Group, a Greenville, S.C.-based Microsoft partner, told CRN this will make the service easier for customers to use.

"Customers are excited about being able to use the native application on mobile platforms without having to cobble together a series of third party applications," Wilson said in an email.

Microsoft is stepping up its big data game as well. Next week, it'll launch a second preview of SQL Server 2014 that uses in-memory database technology to process transactions 10 to 30 times faster than the previous version, Microsoft's Nadella said.

Also new is Windows Azure HDInsight Service, an Apache Hadoop-based service slated for release later this month that works with SQL Server and Excel.

There's also a new Windows Intune mobile device management service that keeps track of iOS, Android and Windows Phone and Surface devices using Active Directory in the cloud.

Microsoft has a global scale public cloud, sells private cloud software and runs lots of data centers, and none of Microsoft's competitors have all of these things, Nadella said.

But, that's just part of it: Microsoft also has "first-party apps" like Office 365, Yammer and Dynamics CRM, which are opening up opportunities in areas such as identity and application management, Nadella said.

Microsoft says it has accumulated more expertise across a wider range of enterprise IT than anyone else in the cloud space. But, Nadella also noted that Microsoft sees lots of room for growth here.

While Windows Server is dominant in the enterprise, Microsoft's share of total IT spending in the enterprise is actually "very low," Nadella said in a Q&A.

"We may have guest OS share of 75 percent, but our real business is to build a ubiquitous cloud that allows enterprises to consume more of our complementary services," he said.

Nadella wouldn't bite when asked if Microsoft is considering getting out of certain businesses, but did acknowledge that changes are afoot at the company. "We are definitely re-inventing a lot of our businesses," he said without elaborating. Nadella also demurred when asked if he's one of the internal candidates to replace the departing Steve Ballmer as CEO, saying only that "Steve is the CEO, and I'm excited about my job."