Channeling the Cloud

Microsoft Wants You To Become a Cloud Provider

You've heard the warnings before, but they're ringing true: If you're not able to provide value-added services, you're probably not going to profit from your relationship with Microsoft.

• By Jeffrey Schwartz
• March 13, 2013

Three years ago this month, Microsoft CEO Steve Ballmer made his infamous declaration that the company was "all-in" with cloud computing. It was in a speech at the University of Washington that Ballmer decreed everything the company does would transition to the cloud. It was evident he wasn't blowing smoke.

"We're betting our company on cloud computing," Ballmer said in the March 4, 2010, speech. It was an inflection point for Microsoft perhaps rivaled only by Chairman and founder Bill Gates' decision to shift from MS-DOS to Windows in the 1980s, his Internet manifesto nearly two decades ago or his 2002 Trustworthy Computing initiative.

Microsoft has since focused its product roadmap on developing software that's cloud-ready, and has pushed partners to transition themselves from software resellers to cloud services providers.

Its cloud-first initiative, in which Microsoft promised it would release new products as hosted services before or at the same time as the on-premises versions, kicked into gear two years ago with Dynamics CRM Online. Recently, the initiative has moved to a much broader stage with the latest release wave of Office, Exchange Server and SharePoint, which are now available as software and as hosted services via the Office 365 moniker.

The launch of Office 2013 may be the last time Microsoft has a major new release of its flagship productivity suite. That's because the company is moving to a model where it unleashes incremental upgrades several times a year. The same appears likely with the new SharePoint 2013 and Exchange Server 2013 releases.

Now, the rubber is meeting the road as partners, on a much wider scale, must transition to the subscription-based recurring revenue model of providing products like Office 365. You've heard the warnings before, but they're ringing true: If you're not able to provide value-added services, you're probably not going to profit from your relationship with Microsoft (or any other software provider).

Microsoft also says it understands that this model won't be for everyone. The January launch of the cloud OS is for partners that would rather become cloud services providers than resell and manage Microsoft-hosted services (see "Tales of Partner Successes in Microsoft's 'Cloud OS'").

Key components of the Microsoft cloud OS, delivered in January, are System Center 2012 SP1 and Windows Azure Services for Windows Server 2012. The new System Center release and its App Controller -- combined with Windows Azure Services for Windows Server 2012 -- allow customers to move their VMs between their datacenters and the cloud.

The cloud OS aims to provide a consistent platform between Windows Azure and Windows Server 2012 deployed in customer datacenters and by partners providing hosted and cloud services. What's the selling proposition for partners to customers? You can run your infrastructure services and apps on-site, via Windows Azure, the partner's cloud or any combination therein.

If you thought Ballmer was blowing smoke three years ago, take stock. It's time to start taking steps toward monetizing this model.

More Columns by Jeff Schwartz:

• Windows Azure Active Directory: Taking AD Deeper into the Cloud
• Microsoft Pushes 'Cloud-First' Approach with SharePoint 2013
• Column Archive