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WPC: Partners' Place in Azure

The headlines on the Windows Azure Platform out of the Microsoft Worldwide Partner Conference (WPC) focused on the pricing and the November release date. For thorough details on the pricing, which will be roughly comparable to those of Amazon Web Services, see Kurt Mackie's news piece.

But Microsoft also spent a lot of time this week laying out what it sees as the major partner opportunities in the Azure cloud computing platform. Those partner opportunities, in turn, had a lot to do with the pricing models Microsoft introduced.

In a conversation at WPC, Prashant Ketkar, director of product marketing for the Windows Azure PMG, discussed some of the likeliest partner business scenarios with RCP.

The most obvious is ISVs. "They now have a platform to deliver their Software as a Service [SaaS] in a globally reachable manner," Ketkar said. These are prime customers for the pay-as-you-go, or consumption-based, pricing models. If business takes off, they'll have the cash flow to pay for the scale. If not, ISVs are out very little. "If you are a start-up developer, for them, this is it. Why invest in the capital of buying hardware or software?"

A little less obvious but also fairly compelling is the opportunity for systems integrators and custom application developers. "Now I can go to my customer and talk to them about solutions, not necessarily about having to invest in the capital to buy hardware and software," Ketkar said. This scenario is a key driver for the parallel subscription-based pricing model.

"Systems integration companies who build consulting services or do systems integration work for large enterprise or mid-market customers typically respond to a request for proposal," Ketkar said. "The customer wants to know, 'Is it going to cost me $20,000 to implement that solution through an SI partner, and then $2,000 on an ongoing basis per month?' The unpredictability of the consumption model is not good. For them, a subscription-based or predictive pricing model becomes very, very important."

There's also a 5 percent discount in pricing to encourage and reward members of the Microsoft Partner Network for using the system. I'm not convinced many partners will be drawn to a new platform by a discount of a few points, but I do believe Microsoft is avoiding the mistake it made with the Business Productivity Online Suite (BPOS) of billing customers directly rather than letting partners bill their customers. Partners who build services on Azure will get the bill from Microsoft, and can pass it on to customers in whatever way makes sense.

As for the overall opportunity, estimates are all over the map. Ketkar says analyst estimates range from a $20 billion to $50 billion opportunity now to a $100 billion to $150 billion opportunity in 2013.

Whatever the top-line number, Ketkar says the lion's share of the market will belong to the ecosystem. "We think that the majority of that, 60 to 70 percent, is in the partner ecosystem. The rest is what the cloud providers would make -- Microsoft, Google, Amazon, hosters."

Posted by Scott Bekker on July 15, 2009