Azure: Microsoft's Next Great Product?

Software cloud computing platform Azure

Risky? It would be hard to argue that anything is truly risky for Microsoft right now, considering its overwhelming operating system market share and billions of dollars in the bank. But pressure seems to be mounting in Redmond, Wash., especially now that Microsoft's legendary founder has retired.

Windows 7 has launched to mostly positive reviews and strong sales, but users are still getting over some disappointing releases in recent years. While Windows Vista and Office 2007 sold well and helped drive Microsoft's remarkable financial performance that year, both products were met with heavy criticism and mounting frustration from users.

In addition, Microsoft's recent history has been marked by the creation of several products that were late to attack growing markets (think Internet Explorer, Xbox, Zune and Bing), but most of these were in popular, consumer-focused areas. And some efforts, like Microsoft's Digital Home initiative have fallen woefully short. Meanwhile, developers, integrators and solution providers have been left wondering when Microsoft would take a break from chasing consumer trends and truly make a splash in business IT. Microsoft needs a hit, preferably an original rather than a sequel to its core Windows and Office products.

That wait appears to be over with the arrival of Windows Azure Platform. But the question is, what exactly is Microsoft selling? At the Professional Developers Conference (PDC) in Los Angeles this week, Ozzie described Azure as an operating environment "designed to manage extremely large pools of computational resources." The simple explanation is that Microsoft wants customers to run their Windows-based applications over the Internet using Microsoft's data centers, with Azure being the system that organizes resources and handles spikes in demand. For example, SQL Azure provides database services through the platform that customers can purchase almost on demand.

The key will be making sure customers and channel partners use the Azure platform to develop those applications. For that, Microsoft has been touting Visual Studio 2010, which will be a crucial part of the Azure development platform. In a way, Azure is a descendent of Microsoft's .Net strategy. The idea is to keep customers and partners tied to the Windows environment while allowing the software to work over the Web. And in the case of Azure, the plan is to offer customers a pay-as-you-go service instead of packaging the applications and selling the licenses.

With Ozzie's help, Microsoft has a strong edge in the cloud computing market. Amazon.com was a pioneer in the space, but it's still seen as an online retailer rather than a computing services company. Salesforce.com is another pioneer, but it's considerably smaller and less well-known than the technology giants jumping into cloud computing. Cisco Systems and Hewlett-Packard, meanwhile, are currently engaged in a battle for networking dominance, and IBM has lagged behind with its cloud strategy. That leaves Google as the biggest likely threat for Microsoft.

But with its entrenched software business and intriguing, almost relentless promotion of Azure, Microsoft looks to take the lead. The software giant has already unleashed Exchange Server 2010 for Web-based e-mail, and the forthcoming Office 2010 released with come with Web-based applications to better compete with Google Apps.

And while Google has gained traction with its cloud computing offerings (it recently scored a big win with the Los Angeles city government's move to Gmail), Microsoft can position itself as a better, more experienced player in the space with rich solutions instead of cheap, bare-bones Web applications. For example, Microsoft unveiled a new Azure service this week codenamed "Dallas," which is designed to give users the power to discover, purchase and manage data on the Azure platform and through Azure-based applications. Essentially, Dallas provides data search as a service, which sounds like something that Google would have come up with.

But Dallas is Microsoft's innovation, and it's offerings like this that have catapulted the software giant to the front line of cloud computing. With Gartner predicting the software-as-a-service (SaaS) market to grow nearly 18 percent this year, cloud computing isn't going away any time soon " despite its nebulous nature. Azure, which is currently in a free preview mode and set for full release early next year, may or may not become Microsoft's next great product and earn a spot on the company's Mount Rushmore. But at the very least, Microsoft and Ozzie will be able to say they were on top of cloud early, rather than late, with a clear strategy and an attractive proposition.