Microsoft (Nasdaq: MSFT) is betting on the cloud to provide the next wave of innovation and opportunities for technologists, businesses and consumers. CEO Steve Ballmer has said that the vendor is “all in” for the cloud, which potentially represents a $3.3 trillionmarket. But where does its cloud computing platform stand today? We gauged several Microsoft executives to find out.

Hyrbid Cloud

As the technology industry moves toward the cloud, users can ease the transition by adopting a hybrid computing model, said Bob Muglia, Microsoft’s president of servers and tools, at the kickoff keynote speech at the company’s TechEd 2010 event in New Orleans.

“We’re at the cusp of a major transformation in the industry called cloud computing. It will affect us all. But to get there it will require a lot of execution and changes,” he said. “We’re creating the precursors for the cloud. Today there is a lot of work you’re doing inside your environment that could be delivered as a service.”

Making money on the cloud

Microsoft is firmly on the cloud-computing bandwagon and with good reason — it can make more money by doing so, even as it helps customers cut costs, business division head Stephen Elop said at the Convergence conference in Atlanta.

The company has spent billions so far to build out its cloud infrastructure for massive economies of scale, Elop said during a meeting with press and analysts. “What we’re doing is taking cost savings and taking them back to the customer.”

Microsoft will win out as well, Elop contended. Microsoft is not only selling applications via the cloud, but raw computing power and a development platform with its Azure service.

“What we’ve done [in the past] is sell software,” Elop said. “In the cloud world we’re still selling that same software but we’re also participating in a bigger part of customers’ IT budgets. We’re going after more of the pot.” Some 90 per cent of Microsoft’s engineering team will be working on cloud computing in some way within a couple of years, according to Elop.

Windows Azure

Due to an early emphasis on getting the right architecture for its Azure cloud platform, which went live in February, Microsoft’s cloud service is still missing key features that are available in the company’s standalone products, said Microsoft executives at the company’s 2010 Tech Ed conference, being held this week in New Orleans.

“Even though Windows Azure is being used in a wide variety of applications, there are still features missing,” admitted Bob Muglia, president of Microsoft’s servers and tools division, in an interview. He was quick to add that Microsoft does plan to offer most of the major features still not available within 12 to 18 months.

“This is not to say every single feature will be there [in this time frame], but the major gaps will start to close,” Muglia said. He mentioned a number of features that only recently have been added to the Azure versions of Microsoft products: One is SQL Server’s support of geolocation coordinates as a data type. Another is support of .NET version 4.

Cloud Task Force

For Microsoft, 2010 is a platform building and marketing year with no less than the future success of its cloud strategy hanging in the balance, according to observers.

Experts say Microsoft’s charge is not only to begin developing and delivering technology that will define its external, internal and hybrid cloud environments, but to clearly articulate to an overwhelming majority of corporate IT pros just how and why they want to live in a cloud.

In addition, there will have to be answers to questions around such issues as security, compliance and performance from those very users.

“In terms of the cloud, it is important for Microsoft to be on the right trajectory, it’s not necessarily important to their business from a revenue standpoint to capture lots of revenue out of cloud in the next 24 months,” says Al Gillen, program vice president for system software at IDC. “But if they don’t get in line to compete, they put themselves at a significant risk of being not there when real money starts to get spent in this space.”

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