Managers suggest the company's cloud computing efforts will be pay as you go, but customers can also prepay if they want discounts.
By J. Nicholas Hoover, InformationWeek
Feb. 12, 2009
URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=214000086
Microsoft will release pricing information on its Windows Azure soon and will also use Azure to power private cloud computing, a Microsoft executive told investors at a conference Wednesday.
Doug Hauger, general manager of marketing and business strategy for Microsoft's cloud infrastructure services group, said Microsoft will announce pricing "soon," but added Windows Azure will cost less than the overall price of running a server internally. Azure will be pay as you go, he said, but customers can also prepay if they want discounts.
As a corollary on pricing guidance, Hauger pointed to the example of Exchange Online, which is priced at $10 per user per month. Licensing the on-premises version of Exchange Server costs users $3 for Exchange Server per user per month, Microsoft says, but with additional costs (including infrastructure, IT staff, licensing and operational costs) Microsoft estimates it adds up to an average of $18 per user per month.
That means Microsoft is confident Azure will be cheaper for customers and will bring Microsoft some benefits as well since it can run cloud apps cheaper than normally because of economies of scale associated with huge data centers, Hauger said.
With prices lower than on-premises software, Hauger said the poor economy will make Azure and other cloud computing platforms more attractive to businesses, despite corporate misgivings about the cloud.
"It's become fairly evident that companies are becoming far more pragmatic about trading off concerns that have never left about privacy and security with economic benefits," he said.
Still, he admitted that that will be true only for a certain subset of applications, including backup , simple .Net-managed applications, disaster recovery, and certain computational functions like photo rendering and drug research. "Your core line of business applications won't be going to the cloud relatively soon unless it's through a private cloud," he said. In order to run on Windows Azure, many of those lines of business apps -- especially older ones -- will have to be rearchitected somewhat, Hauger said. Microsoft itself will provide companies with a private cloud option, Hauger added. It's still unclear how what exactly its offering will look or whether it will come under a different brand than Windows Azure. Microsoft might offer private clouds as some sort of service that sounds more like a dedicated Internet-based cloud than a premises private cloud.
"You would have a private cloud run for a hospital that would be certified as HIPAA compliant and run by the vendor instead of run by a health care client," Hauger said. "We can get the economies of scale in managing that infrastructure and the system and still provide guarantees around the data."
In response to a question about Microsoft's value proposition versus that of its competitors, Microsoft laid out its view of the cloud computing platform market.
"There are companies at the low end that are essentially providing you with a raw set of resources, and they say, 'Hey, here's a VM, here's a server, good luck, and let us know if you have any problems,' " he said, pointing to Amazon.com and VMware. "Then there are a set of people in the pure-play space -- Google is an example in this one with AppEngine -- and so you build an application and it runs, but you have no control over the resources underneath that."
Microsoft, he argued, straddles both of these worlds. "We give you some guarantees around the level of resources you get, the power of that VM you have, the amount of memory you get, etcetera," he said. "But you also get simplified systems management that then takes you into that pure-play cloud services realm."
In addition, he said, Microsoft's cloud, unlike those of Amazon and Google, is designed to integrate with on-premises applications. Microsoft also has a huge on-premises installed base and partner community to draw on, he added.
That said, Hauger said Microsoft doesn't expect to monopolize cloud computing like it has client-server computing, even if many companies decide to standardize on one cloud, as he expects will eventually happen.
"Our cloud is completely based on standardized Web services, and in that sense I think enterprises will look for clouds that provide those standards and that interoperability," he said. "They don't want vendor lock-in, but they won't move, likely." He added that he expects there to be only a handful of major public cloud vendors a decade from now, rather than hundreds.
The editors of Internet Evolution have published an independent analysis of the changing winds in cloud computing. Download the report here (registration required).
