Q&A Part 2: Microsoft's Tom Rizzo Talks Smack on Online Services

This time, Rizzo pulls no punches when it comes to talking down Google's effort to compete against Microsoft, and also discusses future integration opportunities with Windows Azure.

Google will be hard pressed to make a dent in Microsoft's Office franchise, insists Tom Rizzo, Microsoft's senior director of online services. Rizzo is pounding the pavement talking up his company's next big cloud offering: Office 365. With the product released to beta this month, Rizzo has been meeting with analysts and the press to explain the next generation of Microsoft's online productivity offering. In part one of his interview with Redmond Channel Partner magazine, Rizzo talked about the partner opportunities for Office 365 and gave some details about the rollout. This week, in part two, Rizzo pulls no punches when it comes to talking down Google's effort to compete against Microsoft, and also discusses future integration opportunities with Windows Azure.

So what's your take on Google's push into the Office market?
They've been in the cloud productivity space for the last four years and the results haven't been stellar. Most of their customers sit on the free version. They're not paying customers into the Google service. We were just talking to the Gartner guys, Google in four years has less than 1 percent of the enterprise e-mail market, and you could argue Gmail has been their longest product in this space. Sitting at less than 1 percent is not a good place to be after all the hard push they had. There's a couple of reasons for it. They're trying to shoehorn consumer products into the enterprise space. That's like us trying to take things like Hotmail and Skydrive and say "it's enterprise ready, customers should start using it for business." Those weren't built for business to begin with -- they were built with the consumer in mind.

The other thing we hear from customers and partners is Google is not good at providing roadmap support. All the enterprise class things that businesses need and the partners need to be able to service their businesses, Google has no roadmap. They kill products like Wave, they cut off support so customers are left kind of stranded if they've invested in anything that never comes out of beta or comes out of beta and then is killed. I think Google has a lot of learning and growing up to do in the enterprise, and I think you can also see that through the partner ecosystem, they just don't have a lot of commercial partners building services on top of their products.

That said they said they have 2,000 partners, which has doubled in the past year...
Two thousand partners in four years. We have to peel back how many of those are partners in name verses partners in practice. How many of them are actually doing business on the Google platform and actually winning customers there verses signed up for the Google partner program, which is a very low bar to sign up for. I think it's an inflated number in terms of the real partners doing real business on the Google platform.

What's your reaction to the Cloud Connect tool they released that links Office to Google Docs?
Yeah, the DocVerse technology. I think it's a little bit of them waving the white flag. When they first came out, they were very aggressive against Office, four years ago they said you can replace Office on the desktop and Google Apps is going to be that replacement. Then they quickly backed away from that and said, "maybe Google Apps isn't a replacement for Office, it will be a companion to Office," now they are building technology to try and connect it together. At the end of the day, with the Cloud Connect technology they are waving the white flag, that Office is winning on the desktop. I would say customers looking at that Cloud Connect definitely should look at Office connecting to our cloud services because it's Office in both places in terms of our Office Web Apps and Office on the desktop.

What is the relationship, if any between Office 365 and Windows Azure?
We are working really closely with the Azure team to make sure that Azure and Office 365 connect well together, because we realize that the partners, especially ISVs will want to build apps that run in Azure that they can sell to people running in Office 365. We want to make sure identity, security integration is all there so you can have the two solutions integrate plus we are investing a lot in Pinpoint, our marketplace, so it spans not only geographically everywhere but also spans Dynamics CRM, Azure, and Office 365 so a customer has one place to go look for partners whether they're services partners solution providers, or whether they are selling software through the marketplace.

Tom Rizzo, Microsoft Senior Director of Online Services (Photo courtesy of Microsoft Corp.)

What kind of apps will lend themselves to running on Azure from Office 365?
I think it's similar apps to those built and run on premises, so things that maybe extend with horizontal solutions There's a multitude of things that customers can do and partners can build and customers can buy through the cloud by building them on top of Azure. The great thing for the partner is Azure scales, so if they get a great app and people start buying then the partner doesn't' have to worry about scaling their own infrastructure.

To what extent are you seeing customers interested in extending Office apps onto Azure?
A lot of the Azure apps today are Web based because we don't have the Office 365 product out yet, and the BPOS product, while it integrates, there's still a bunch of work you have to do as a partner to integrate the two together. Office 365 will make it more seamless. Productivity applications are probably not the majority of the Azure apps but I think you will see that shift over time as we get Office 365 to the market.

What horizontal or vertical industry trends do you see in terms of customer interest in cloud computing solutions?
I would split it into two in terms of industries and workloads. The first workload that we see coming to the cloud is email and even Gartner predicts email will be the first to come to market. They said it will be 30 percent by 2015 and 50 percent 2018. So that is definitely the first workload to go and we are seeing that happening in spades. Next is team collaboration and document sharing where you may want to put up a document, share it with others in an extranet business-to-business portal. In terms of industries, we see small and medium business being the first to go to the cloud because they don't want to run IT infrastructure. Enterprises will be slower, or they'll have more hybrid solutions where they've got some stuff on premises, some stuff in the cloud.

What about specific verticals?
Manufacturing, is definitely one of them where you may have a set of what we call structured task workers or kiosk workers. For example a car company where you may have of 200,000 people, maybe 100,000 work on the shop floor where they don't need high-end productivity, they just need simple e-mail, simple calendaring and maybe access to a portal to access their HR information. Also financial services is another one looking heavily at the cloud, and from there healthcare. Obviously sensitive information stays on premises but they are moving other stuff into the cloud.

What's you take on how premises and cloud-based solutions will co-exist?
I think hybrid is around for awhile, especially in the enterprise. In SMB I think it goes faster where they move to an all cloud model. I think in the enterprise, I think on premises is not going anywhere, both in enterprise and large government. I think that presents opportunity to make that integration easier and to also have folks help us with the transition to the cloud over time. I think it also opens the opportunity for the Azure technologies where people can develop applications. And the Azure appliance as well, will allow people to move stuff into their private clouds. We hear a lot of conversation around private clouds. I would say one of the other differences between us and Google for sure is we don't require an IT ultimatum. You want to run stuff on prem? Great, we have an on-prem solution. Want to run stuff in the cloud? We have a cloud solution. You want to run both, we have that. Google is one size fits all across everywhere. It all has to be cloud-based.

When it comes to online services, how much goes through partners record verses direct?
We don't publish out those numbers. One of things I will say is when there is a partner of record, the deployment goes a lot better, than when there isn't a partner of record because partners are there to help the customers. We try to provide guidance for customers that do it on their own. The thing about moving to the cloud for partners is that the customer is always there too, so if they're having a bad experience, you can always interact more with the customers. One of the things we always tell our partners when moving to the cloud to is you have to make sure you're concerned about customer experience management more than ever before because a customer can cancel the subscription to us or the subscription to you the following month. It's not like they buy a license and you go talk to them two years later or three years later and renew that license. That's a very different model for some of our partners and we're trying to help them along in this transition.

Have you sorted out the training and certification requirements yet for Office 365?
We are working through that. We do have our Cloud Essentials and our Cloud Accelerate programs in place today. Cloud Essentials is effectively free to any partner that's part of the Microsoft Partner Network, and then you can move up to the more robust Cloud Accelerate which has more requirements of the partner and has more requirements of us, where we give you not only all the things we give you in Cloud Essentials, which is things like free BPOS for you to run as a partner, Azure and a bunch of other things. But also we give you training. Then if you move up to Cloud Accelerate we actually give you advisory hours from Microsoft so you can either bring us into a deal, and we can help you work through a deal, bring us into a deployment, we'll help you through the deployment. We also will engage you with our local subsidiaries, so if you're a partner based in Asia, we'll make sure that you are connected to our local subsidiaries to help with co-selling, co-marketing, those sorts of things. We'll definitely tell partners to go with Cloud Essentials first, and then move up to Cloud Accelerate if it makes sense for you.

Do you have any numbers on the beta?
We have 2,000 a day -- that's 2,000 organizations, that's not people because orgs have multiple people. That's signups, that's not provisioned, because it is a limited beta. It costs us money to provision lots of people. We still are taking signups. That does not mean the customer or partner will get in but we are definitely interested in getting the signup and bringing people online.

Do you anticipate closing it out?
Maybe. TBD, I would say. If we feel good about the coverage of testing, both on the small business side and enterprise side, we may close it out. But right now we are continuing to provision people on the beta.