Microsoft Azure to Run Microsoft's Own Cloud Applications

Ray Ozzie, the developer of the much heralded Lotus Notes and now Bill Gates' replacement as chief software architect at Microsoft has a lot riding on Microsoft Azure. So does Microsoft.  Azure's debut is a critical step for Ozzie and for his employer. Ozzie sees Azure as a chance to remake Microsoft's businesses for years to come, changing the way it produces software and is paid for its products. Ozzie announced Azure a year ago and reportedly  has been little seen since. Supposedly, he is now on the road much of the time, lining up corporate customers to use Azure. He will presumably present to developers at the Microsoft Professional Developers Conference (PDC09) to be held November 17 - 19, 2009 in Los Angeles, even though he is not listed in the public schedule.

Forbes reported that In a suburb outside Chicago, Microsoft has been showing off its latest data center. It says the 707,000-square-foot building will hold, at top strength, 162 sealed cargo containers of up to 2,500 computer servers each, plus thousands more servers in conventional racks. The cost: $500 million. But though Microsoft's Windows 7 operating system is capturing all the attention these days, this bland building might be a place to see the company's future.

All the computers will run on a single operating system called Azure that, eventually, will let big companies run applications like e-mail and house data at this and other Microsoft ( MSFT- news - people ) centers. Azure is the company's main play in the biggest contest in technology, called cloud computing, wherein data storage and computation take place many miles from customers' desks. The idea is to cut the cost of the labor, the hardware and the energy that go into data processing, and to make files accessible to workers who move around a lot. Proponents promise cost reductions between 30% to 90%. At the Chicago center only three Microsoft employees and a few contractors can run over 400,000 servers catering to more than 670 million e-mail and instant messaging accounts and drawing 60 megawatts of electricity.

Microsoft has a principle of "eating its own dog food," so it will initially use this center to run 250 of its businesses, including the Bing search service and the Xbox Live gaming platform. Those now run on servers all over the world. But Forbes says that the real goal is to persuade big companies like Coca-Cola Enterprises ( CCE - news -people ), Fujitsu and Pitney Bowes ( PBI - news - people ) (which have taken a peek) to trust their data to the megacomputers and then trust Azure to manage it.

 Microsoft's "secret sauce" to distinguish it from a growing array of competitors is convincing developers  that there is "one way to write for everything: the cloud, the server, the desktop, mobile," says Timothy O'Brien, senior director for platform strategy. "That is a really big deal."

In a test Azure offered rental prices of 12 cents an hour for use of one computer processor and 15 cents a month for a gigabyte of storage.

That is cheap, half what Amazon charges for some of its cloud computing. Amazon says, however, that the majority of its prices are much lower than what Microsoft initially charged. The company has a history of lowering its prices, too, and competing on very thin profit margins--in other words, bring 'em on. Can Microsoft get the same kinds of margins it is built on by charging 12 cents an hour? The company says it can. Microsoft thinks a server with a two- to five-year life span could pay for itself in a couple of months if it were running full blast. And since Azure works in concert with PCs and corporate servers, the company hopes to sell plenty more operating systems down the road.

Forbes say that Microsoft does not expect wholesale corporate adoption at first. Businesses will start with just a few components, like sending a portion of e-mail or little-used data off to Microsoft's care. As it builds trust, Azure will grow in size and complexity, says Arne Josefsberg, Microsoft's general manager of infrastructure services: "It's going to be a negotiation every day." But Josefsberg insists that if Azure absorbs both Microsoft's online empire and a fair amount of corporate assignments, it may be the Internet's largest single piece of software, in terms of the amount of data it runs, within a year.

Security is a key issue for prospective users of Cloud Computing.  Microsoft argues that its Azure system is more secure than current corporate software, since it can spot attacks and patch flaws in the system from a central location.

Not everyone has jumped on the bandwagon. IDC seems to be a skeptic.. "You don't see a lot of businesses now with spare technicians to migrate their software over [to the cloud]," says Michelle Bailey of analyst firm IDC. "Anything with real business value won't be on the cloud for years." She figures this business needs ten years to kick in, maybe less in developing nations with looser laws.


Microsoft and the Cloud Computing industry all hope she is being overly pessimistic.