Anyone following Microsoft should develop an understanding of how a decision by a prominent enterprise IT organization to purchase IaaS from Amazon, AWS, or Google Compute,, more often than not, is a win for Microsoft, as well.
Scott Guthrie, Corporate Vice President, Microsoft, and head of Cloud and Enterprise Business, made this point during the Citi Global Technology Conference, on September 3, 2014. Guthrie observed ” . . . in the Azure world, or even in the AWS world, we still will make money from that Windows Server license”.
One can argue most of the needs for desktop computing for enterprise businesses, and their peers in the public, and not for profit sectors, remains all about the Microsoft Office suite, so when a Microsoft competitor, either Amazon AWS, or Google Compute, lands a big deal (for example, the US CIA decision to award a contract for a private cloud to Amazon, rather than IBM), Microsoft wins, as well.
If one keeps this understanding in mind, then the question of who actually dominates the market for cloud IaaS becomes less pressing. Additional details provided by Guthrie in his presentation, and his answers to questions posed by Walter Pritchard of Citigroup portray a different picture of this market than, perhaps, would otherwise be the case based on media pronouncements about it.
The commingling of ISVs throughout the whole process is much more extensive than one would otherwise expect. Pritchard focuses on instances where Microsoft Azure provides the IaaS for enterprise customers running higher value services (like analytics, CRM, ERP, etc) from other ISVs, and asks Guthrie: “How do you ultimately think about monetizing that type of an offering, where it is a premium service, but it’s not your IP and it might be something that either others get paid on, like Oracle, or is an open source no IP technology running on top of that?” Guthrie’s answer speaks to, perhaps, a new willingness, on Microsoft’s part, to embrace an extensively different enterprise computing world, where services from many ISVs are consumed by the same organization: ” . . . [t]here’s an analogy I’ve used within the team, which is keep your old friends and make new friends.” In other words, Micorosoft has transformed itself into something of a “platform agnostic” business, with much more confidence in its ability to make money either way. This should be good news for anyone following Microsoft.
Ira Michael Blonder
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