Now that Microsoft has announced the availability of its cloud based operating system (free for now, with billing starting in November) and laid out the pricing and business model, it's time to ask exactly what this all really means for small and midsize businesses.
The initial answer is not much, at least for a while. Small and midsize businesses don't need a cloud operating system per se, and Azure is not intended to provide services directly to end users.
Instead, Azure is designed to be a Platform as a Service (PaaS) ecosystem that developers can use to build applications. the idea, according to Doug Hauger, general manager for Windows Azure, is to "put enterprise-class technologies in the hands of SMBs with a reliable SLA" (Service Level Agreement).
These apps will run in Microsoft data centers, with the Microsoft application bus, and Microsoft's federated authentication engine. They can do that using .Net, SQL Azure, templates for Microsoft's Visual Studios, or with other development technologies such as Ruby, Python, PHP, MySQL, and even Java.
Eventually, if Microsoft Azure catches on as a PaaS leader, third-party developers could finally deliver on PaaS' promise of cheap, customized applications for even small businesses. Hauger said Microsoft partners will use Azure to build services like CRM, ERP, and supply chain management.
Hauger also added two more expected applications for Azure:
1. Collaboration and communication. Microsoft plans to move Exchange Online and SharePoint Online to Azure, Hauger said, adding that over time most Microsoft services will be moved to the new platform. Smaller companies can benefit, Hauger said, by integrating their own communities using Azure.
2. Access to high-performance computing environments. Hauger said Azure will allow even smaller companies that need only 10-15 nodes to get what they need in a cost-effective fashion.
The cost for developing these applications will be lower, Hauger said, so they should be able to deliver those services at lower prices than traditional software applications. As in many PaaS environments, development time should also be faster. Hauger cited Azure beta tester West Monroe Partners, which built a portal for the Taste of Chicago festival in less than two weeks that is already serving 50,000 unique users.
Looked at that way, Microsoft is not really competing with Amazon EC2 or Google Docs here, but with other PaaS vendors trying to create ecosystems of developers. Salesforce.com's Force.com platform is now being used to develop a number of cloud-based apps for small and midsize companies, but while Force.com boasts a robust developer community, it's dwarfed by the 7 to 8 million Microsoft developers out there.
Similarly, while Salesforce.com has developed a good reputation for cost-effective technology over the past decade, Microsoft is the 800-pound-gorilla in any discussion of software.
Now, it's true that Microsoft Azure is a bit late to the game. And it's also true that those millions of Microsoft developers are not yet using Azure. But even if adoption rates are relatively low, Microsoft's sheer size is likely to make Azure a key cloud computing platform.
Hauger acknowledged that there are a lot of PaaS platforms out there, but he dismissed the competitors as offering either only "building block" or niche operations. "CRM as a platform?" he sniffed, in an obvious dig at Force.com. And in unspoken comparison to Amazon EC2, he suggested that "developers want the simplicity of an abstracted platform, not an infrastructure."
We'll know soon enough what developers want, and by November we'll see what they're willing to pay for. And their interest and the services they create will determine the ultimate value of Microsoft Azure to small and midsize companies.
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