Microsoft’s Windows Azure development engine is chugging along, following closely the original path the team outlined for its cloud operating environment. But the marketing and positioning of Azure isn’t tracking as smoothly.
As I noted in part one of my ‘Azure year in review’ post yesterday, Microsoft has made a number of under-the-cover additions to Azure. Microsoft is now in the position of leading with its cloud on the Windows development front. In other words, new Windows Server features are developed for and launched in Windows Azure before they make it into a new release of Windows Server software.
Microsoft is in the process of attempting to lead with the cloud on the Azure marketing front, as well. But its messaging here is murkier. Company execs abruptly stopped touting “Software + Services” as the way Microsoft is going to market with its products. Chief Operating Officer Kevin Turner recently told Wall Street analysts that playing up customer choice between software and cloud services wasn’t a good move strategically and that Microsoft is now “course-correcting” by convincing customers to go with its cloud wares over its on-premises software.
The problem is Microsoft makes far and away most of its money from software, not services — and is likely to do so for a number of years ahead. Despite Turner’s claims “the cloud actually helps better position Microsoft to sell more on-premise products than we ever have before,” there’s little to back up that assertion. Microsoft officials have made a case for how/why leading with the cloud offers the company new opportunities to reach brand-new customers, but haven’t offered any real evidence that the cloud will generate the high margins that software sales traditionally have.
In short, Microsoft can’t — and won’t — suddenly turn the switch and stop selling software in favor of cloud services. In spite of the corporate edict to “lead with the cloud,” officials still seem conflicted about how to tell customers they still have a choice. Example: Microsoft is touting its recently announced Windows Azure Appliances as the way large enterprise customers will be able to run a private Azure cloud at their sites. But it also is continuing to offer its Dynamic Datacenter Toolkit, Windows Server AppFabric, BizTalk Server and other software components the building blocks for customers desiring their own private clouds.
In spite of the company’s “We’re All In” cloud messaging, you still find Microsoft using charts like the one below that highlight the software and services options available to users:
When I asked the Softies about the challenges of positioning Windows Azure and cloud services vs. Windows Server and on-premises enterprise software products, I received this statement from a company spokesperson:
“Ultimately, it’s up to the customer if, when and how they move to the cloud. We see it as our job to provide the choice and the right solutions, guidance and tools to enable them to use their existing skills and achieve the fastest time to business value. For those organizations and businesses that want a highly optimized, scalable environment where we prescribe the hardware and normalize the cost of operations, that’s our services platform, the Windows Azure platform. For those that want the versatility to enable environments of any scale, or that need custom hardware configurations and operating models, that’s our server platform, built on Windows Server.”
Next Page: Customer choice vs. confusion
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