Microsoft Targets VMware Service Providers With New Hybrid Cloud Program

With Amazon dominating the public cloud, and VMware doing the same in the data center, Microsoft is pitching itself as the only vendor that can give enterprises the best of both worlds.

Microsoft on Thursday unveiled Cloud OS Network, describing it as a "consortium" of service providers that have agreed to upgrade their data centers to the latest versions of Microsoft's cloud software and use it to deliver their own services.

Cloud OS Network service providers must agree to use Windows Server 2012 R2 and System Center 2012 R2, both of which Microsoft launched in October, and the Windows Azure Pack, a free add-on that brings public cloud features like self-service and multitenancy to Windows Server-based private clouds.

[Related: Microsoft Stakes Its Claim As Top Dog In Enterprise Cloud Market ]

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The goal of the program is for service provider clouds to have the same Microsoft software underpinnings as the Windows Azure public cloud, Takeshi Numoto, Microsoft's vice president of cloud and enterprise marketing, said in an interview. This lets enterprises move apps and data back and forth from their own private clouds, tapping into the cost benefits and flexibility of public cloud as they see fit.

So far, Microsoft has signed up 25 service providers spanning 90 global markets, which collectively run 425 data centers serving 3 million customers, Numoto said. Service providers serving the U.S. market include CGI, CSC and Dimension Data, but the majority are based in other countries.

The Cloud OS Network is more than just a licensing program: Microsoft works closely with service providers to ensure that their clouds "work great in a hybrid way," Numoto said, describing these interactions as "deep technical engagements."

For example, single sign-on needs to work across private clouds, service provider clouds and Azure, and virtual machines should be easy to move back and forth between them, Numoto said.

That said, one of the big advantages of the Cloud OS Network is lower licensing costs. Microsoft has been saying for years that customers can save money by switching from VMware to Hyper-V, and one service provider that has signed up for the new program is finding this to be accurate.

"We found Windows Server 2012 R2 has the same level of virtualization at a significantly lower cost, with service provider licensing," Kjell Tore Espeseth, CTO at TeleComputing ASA, a Norway-based service provider that partners with Microsoft and VMware, said in an interview. "This will allow us to be more competitive in our markets."

NEXT: Other Benefits TeleComputing Sees In The Program

TeleComputing, a Microsoft partner since 1997, isn't dropping VMware altogether, but TeleComputing's Espeseth said the cost benefits are too significant to ignore.

TeleComputing is also saving money by using System Center to automate operations, he said. "This can actually drive costs lower than just moving licensing from VMware to Microsoft," Espeseth said. VMware couldn't be reached for comment.

If the program works, Microsoft will be able to further stake its claim as the only vendor that can do public and private cloud with a high level of proficiency. Microsoft often says running large scale Internet services like Bing, Skype, Office 365 and has given it experience other vendors don't have.

"The fact that we are a large Internet-scale services provider ourselves gives us lots of advantages to the customer," Microsoft's Numoto said. "We can deliver economies of scale back to them, and this also drives a lot of IP development and learning."

Yet Microsoft's cloud storyline isn't unique -- Amazon Web Services executives like to tell a similar story about how they developed technology to run their internal operations and eventually realized it had grown into an enterprise-grade cloud portfolio.

IBM, by virtue of its SoftLayer acquisition, can also boast a public cloud that incorporates years of experience from SoftLayer's origins in the hosting business.

Nonetheless, Numoto insisted that Microsoft is "uniquely" positioned in the hybrid cloud space.

"We're the only ones with huge scale Internet cloud services, and also a presence in the on-premise customer environment," he told CRN. "Other, more traditional enterprise vendors talk about being enterprise grade, but they don't have the first-party services."