Channeling the Cloud

How Microsoft Missed the Cloud Forecast Under Ballmer

The outgoing Microsoft CEO gave his "all in" cloud mandate over three years ago, but entrenched players like Amazon Web Services and Google have left Microsoft fighting to secure a foothold for its own cloud services.

• By Jeffrey Schwartz
• October 16, 2013

I've heard very few complaints about Steve Ballmer's plans to retire. Perhaps his biggest failing was letting Apple, VMware and Google marginalize the core Microsoft Windows, Office and server infrastructure franchises. But under Ballmer's stewardship, the company also missed an opportunity to lead in the cloud.

Some might argue that's an unfair indictment considering Ballmer famously announced the company was "all-in" regarding cloud computing more than three-and-a-half years ago. Ballmer's March 2010 cloud proclamation emulated a similar call-to-arms 15 years earlier when founder and then-CEO Bill Gates issued his infamous Internet Tidal Wave warning. Just as Microsoft initially failed to notice the growth of the Web then, under Ballmer the company let upstarts take a lead in cloud computing.

Microsoft certainly paid a price for the tactics it used to preserve its Windows franchise against Netscape. But, regardless, the company quickly responded to the Web threat by developing a browser, Internet Information Server and embracing key standards.

Although Microsoft dodged a bullet with Gates' Internet wakeup call, the horses were already out of the barn by the time Ballmer gave his cloud mandate. The tremendous global footprint of Amazon Web Services and its cloud infrastructure services were entrenched for many years while Windows Azure was still in its infancy. It wasn't until a few months ago that Microsoft finally delivered its comparable Windows Azure Infrastructure Services.

The first iteration of Windows Azure delivered in early 2010 was a Platform as a Service (PaaS). At the time, there wasn't broad demand for PaaS like there was for Infrastructure as a Service (IaaS) from Amazon. PaaS still isn't ready for prime time -- customers just want to spin up virtual infrastructure. The Amazon IaaS business is still by far larger than anyone else's.

Now that Windows Azure Infrastructure Services is available and is designed with the same architecture as Windows Server 2012, a significantly improved Hyper-V and System Center 2012, Microsoft has paved the way for organizations to migrate and share their workloads locally and in its public cloud when they're ready. But the jury is out as to when and to what extent organizations will move their compute and network infrastructures off-premises.

Meanwhile, history will judge whether Ballmer waited too long to respond to the rise of Google Apps. Microsoft claims Office 365 is growing but Google also appears to be picking off a lot of one-time Office shops. Almost every key platform Microsoft offers is under siege by a cloud-based alternative: Salesforce.com and Oracle still are the leading Software as a Service (SaaS) application providers, companies such as Box and Jive are gunning for the Microsoft SharePoint business, and the list goes on.

Yet despite the misses, IaaS, PaaS and even SaaS are still in their early days, and there's plenty of room for many players to build formidable cloud businesses. Fortunately for Ballmer's successor, Microsoft's cloud prospects are still promising.

More Columns by Jeffrey Schwartz:

• Microsoft's Cloud Partners Face Hard Questions After PRISM Scandal
• Microsoft, HP, VMware and Rackspace: The War of the Cloud OSes
• Column Archive