For Windows Server 2012, Microsoft Puts Hosting Partners First

Hosting services providers have always been important stakeholders in Windows Server development. With the 2012 version and its Cloud OS emphasis, Microsoft hosters' needs come to the fore.

As the Microsoft Windows Server team drew up plans for Windows Server 2012, it was with the realization that the channel for servers is in the midst of a radical transformation.

"If I look at how organizations used to buy servers, it was largely from a server manufacturer. They would install applications on-premises and operate them themselves," explains Mike Schutz, general manager of Windows Server and Management at Microsoft.

"In many ways, service providers are the new OEMs. They are how organizations will purchase and consume server capacity and applications. So we see them as a critical channel for our applications and services, because this is increasingly how businesses are going to consume IT," Schutz says.

Similar to previous editions, Windows Server 2012 is a complex and multifaceted product with an equally complex and multifaceted customer base that includes enterprise organizations, midsize businesses, small businesses, government agencies, nonprofits and many types of partners -- including, of course, hosting providers. All of those groups' needs had to be taken into account in the development of Windows Server 2012, which Microsoft released in September and bills as an anchor of what it calls a "Cloud OS." (Microsoft uses Cloud OS to refer to the superset of Windows Server 2012, the forthcoming System Center 2012 SP1 and Windows Azure. The idea is to provide a single, consistent platform for management and application development across private clouds, partner-hosted clouds and public clouds.)

To the extent that any one user community took priority in the design of this OS, though, a fair argument can be made that it was Microsoft's hosting partners.

"Our Cloud OS strategy really embraces the service provider," says Schutz. "The design point for Windows Server 2012 was a service provider."

We spoke with three early-adopter hosting partners with high profiles in the community -- Outsourcery Hosting Ltd., Hostway Corp. and Rackspace U.S. Inc. All three are enthusiastic about various features of the new Cloud OS and Windows Server 2012 and are leveraging the platform's capabilities to both improve internal efficiencies and generate new revenues.

"Windows Server 2012 is about efficiency for me and optimizing our services, and then being able to offer new services to customers, as well," says Mike Charles, product manager for cloud infrastructure at Outsourcery. "It's allowing us to do both of those things."

Outsourcery Plans To Save $78,000
Manchester, U.K.-based Outsourcery is bullish on the improvements it will get from using Windows Server 2012 internally. In a case study prepared with Microsoft, the company estimated it would save more than £50,000 -- about $78,000 -- in IT costs related to using Windows Server 2012.

One of the many improvements the multiple Microsoft Partner of the Year-award-winning hoster is looking forward to is the dramatic increase in scalability for VMs, which will allow Outsourcery to stack more VMs on its powerful hardware.

The Windows Server 2008 R2 limitation of four processors per VM and other Hyper-V limitations capped how much Outsourcery could scale for efficiency.

"In 2012, it's 64 virtual CPUs [per VM and clusters with 64 nodes]. We've only needed to add eight nodes at the moment, but 64 is impressive," says Trevor Baker, senior infrastructure engineer at Outsourcery. The company is now able to run 67 percent more VMs per server, driving some of the internal cost savings.

"In many ways, service providers are the new OEMs. They're how organizations will purchase and consume server capacity and applications."

Mike Schutz, General Manager, Windows Server and Management, Microsoft

Meanwhile, the new live migration feature of the OS is allowing Outsourcery to drastically reduce the amount of time it takes to move VMs around, Baker says. (For more on specific features, see "24 Things That Partners Should Know About Windows Server 2012," October 2012.)

Not only is the increase in scalability a driver of internal cost savings, it will also allow the hoster to support more robust customer demands.

"Because of the ability to add more virtual CPUs per host, larger amounts of RAM per host and virtual hard drives that are larger than 2TB, we can offer high-performance servers for larger SQL workloads and larger enterprise deployments," Baker says.

Charles anticipates several new revenue streams. "Where we're seeing the interest already is not people that want to adopt Windows Server 2012 wholesale on day one, because they're going to be few and far between. It's people who want to test, especially ISVs."

Outsourcery is also exploring customer interest in disaster recovery protection through another new feature of Windows Server 2012 -- Hyper-V Replica. The storage- and workload-agnostic feature that's built into Hyper-V could allow the hosting company to offer failover for customers between its London and Leicester, U.K., datacenters.

Describing Hyper-V Replica as a high-level disaster recovery service with no software extra cost, Charles says, "That's one thing that excites me quite a lot. We might be looking at offering a disaster recovery service to our customers. Perhaps we can also offer disaster recovery for people's on-premises infrastructures."

Hostway Launches BCDR Service
One hosting services provider with a specialized focus on small to midsize business (SMB) customers, Chicago-based Hostway, already has a beta version of a Hyper-V Replica-based business continuity and disaster recovery (BCDR) service available.

Hostway unveiled the service at the Sept. 4 launch of Windows Server 2012. Having the functionality built into the Microsoft service fits Hostway's business model of offering previously enterprise-only services to smaller customers. "We can offer the same level of service as some of the competition that are using VMware as the hypervisor at a much more competitive price point," says Aaron Hollobaugh, vice president of marketing at Hostway.

Hostway had previously offered some customers the ability to use its datacenters to build their own disaster recovery solutions, but the Hyper-V Replica feature simplifies the effort for Hostway and for customers.

"Windows Server 2012 is really the first full-blown effort that we've had to productize and create a solution," Hollobaugh says. "We actually believe the new client and new partner opportunities will grow exponentially as we continue to build out cloud-enabled BCDR solutions that take advantage of our geographically dispersed datacenters in North America."

The BCDR service, which is expected to go into full production in the first quarter of 2013, comes in addition to offerings for customers to purchase hosted Windows Server 2012 instances for testing and, when customers are ready, production use.

As Hollobaugh looks ahead to other opportunities that Hostway might pursue, one is in leveraging the Cloud OS platform to create a unified interface for Hostway customers to manage services hosted with Microsoft in Windows Azure and at Hostway via a single pane of glass. "Say you're hosting within a Windows Azure datacenter, and you need to spin up additional resources for scalability or you need to build in some compliance or other redundancies -- or you may have some applications that need a higher level of support," Hollobaugh says, while explaining the usefulness of managing the Microsoft public cloud and Hostway's partner-hosted cloud together.

He says Microsoft has some beta technologies for such extensible management consoles, but Hostway will have to do some engineering work on its side if the company decides to pursue that opportunity.

Hostway is seeing savings from using Windows Server 2012 and the Cloud OS platform internally, says Preeti Nirwal, a product manager for cloud services at the company. "A lot of their enhancements on scalability, performance and density are providing cost savings. That's a really big aspect that's interesting for us and other providers, as well," Nirwal says. Other drivers of cost savings include network virtualization features that make it easier to move workloads around tools to manage multiple clusters, she says.

Rackspace Sees Time Savings
Another major hosting company, San Antonio, Texas-based Rackspace, is up with Windows Server 2012 instances for customers to test.

"I [just] spun up my first Windows Server 2012 Cloud Server," notes John Engates, with a technologist's sense of accomplishment. Engates is the chief technology officer at Rackspace, and Cloud Servers is the company's hosted server instance product. Cloud Servers is based on the OpenStack cloud platform project that Rackspace pioneered with NASA in 2010, and which now has 150 companies participating.

Rackspace offers both Linux and Windows servers through Cloud Servers, and Windows Server 2012 now joins Windows Server 2008 R2 in the Windows options menu. In October, Rackspace began offering customers Windows Server 2012 images that contain SQL Server 2012 Web and Standard editions, as well.

"For us it's a way for our customers to try out Windows Server 2012 in the cloud at a very low cost," Engates says. Soon, Rackspace will layer on managed services and offer versions of Windows Server 2012 for customers of dedicated hosting. He also sees the Windows Server 2012/SQL Server 2012 combination as a huge potential business driver, especially for customers still on Windows Server 2003.

It's some of the improvements for internal efficiencies that have really caught the attention of Rackspace engineers, though.

"When we look at Windows Server 2012, we're looking at a much more robust Web server platform than what came before it. The CPU throttling [in IIS 8 sets better] boundaries on what a customer can do -- what you don't want a customer to be able to do is soak up all the resources in the environment," Engates says.

Another area optimized in IIS 8 is the ability to load large configuration files, dramatically speeding up Rackspace's process of updating configurations of tens of thousands of Web sites split across multiple pools of resources. Engates' engineers have also told him the improvements to Windows PowerShell are proving a huge help.

With Rackspace already managing thousands of servers per person, Engates is expecting the IT productivity gains from Windows Server 2012 to primarily benefit Rackspace's customers. "It could get better for us, but most of our efficiency is pretty baked in," he says. "Most of the efficiency would trickle down to customers."

"When we look at Windows Server 2012, we're looking at a much more robust Web server platform than what came before it."

John Engates, Chief Technology Officer, Rackspace

Windows Azure Inspired
What's ironic about the situation is that even as Microsoft's hosting partners cast an extremely wary eye on Microsoft's potentially competitive public cloud ambitions, it's those same experiences with running a Windows Azure cloud that are making Windows Server more services provider-friendly.

"We built Windows Azure to be multi-tenant. We have tens of thousands of customers who run their applications on our infrastructure," says Microsoft's Schutz. "We took those same concepts and learning in the public cloud in a virtuous cycle. Now service providers can look to us to provide that underlying platform. They can focus on delivering new value to their customers instead of just building infrastructure."

It's not just Microsoft saying that, either.

"A lot of people in the industry are concerned about Windows Azure. We actually see it as an augmentation and a complement to what we do," Hostway's Hollobaugh says.

Maybe if Windows Azure had been wildly successful out of the gate, hosting partners would be getting squeezed (although Microsoft has always said partner hosting would be an important part of the mix). But as things stand, Windows Azure and Microsoft hosting partners are two major pieces in a complex market.

According to Schutz, that market is generally trending toward hosted servers over on-premises boxes.

"Hosting is growing at two to three times the rate of the traditional SMB or enterprise segments. [Hosting providers] are struggling to keep up. We're reducing the friction to help them grow," Schutz says.

At least a few of Microsoft's roughly 14,000 hosting providers are already using their new status as star users of Windows Server 2012 to seek new efficiencies and revenues.

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