Microsoft Focused on Azure, Zune Smartphone Rumors This Week

Microsoft experienced a cloud-centric week with Windows Azure, which is now generally available in 21 countries and no longer available for free. Microsoft hopes that the cloud-based platform and its application-building tools for developers will allow it to gain market share in the cloud computing arena, where it faces strong competition from the likes of Google and Amazon. In addition to Azure, Microsoft received some good news on the Windows 7 front, with a new report from Net Applications showing a rising rate of adoption for the new operating system. However, Microsoft continues to face some difficulties in mobile, with the rumor mill suggesting that the company may try to introduce a branded smartphone later this month.

Although Microsoft has traditionally earned the substantial bulk of its revenues from desktop-centric products such as its Windows operating system and Office, the company has also been constructing new cloud-based software as a way of creating a viable future. To that end, Microsoft announced on Feb. 1 that its Windows Azure platform, a competitor in the cloud computing space increasingly crowded by the likes of Amazon and Google, will be made generally available in 21 countries.

Azure consists of three components: Windows Azure, an operating system as a service; SQL Azure, a cloud-relational database; and Windows Azure Platform AppFabric, designed to provide security connectivity and federated access control for applications. The platform had been offered as a Community Technology Preview until Jan. 1, 2010, after which Microsoft announced a full switch-on of its services. The company started actually charging for Azure's use on Feb. 2 at 12:00 a.m. GMT, a date and time designed to give developers in all 21 countries the chance at a full January of free service.

Customers have three payment options with Azure: a pay-as-you-go model, a subscription format and volume licensing. For all three types of service, users will pay 10 cents per gigabyte for incoming data, and 15 cents for outgoing data, while the "consumption" model will charge 12 cents per hour of infrastructure usage. Storage will cost 15 cents per gigabyte. The business edition of the SQL Azure database will cost a flat $99.99.

Those customers who opted not to upgrade their Windows Azure Community Technology Preview (CTP) accounts have seen their service disabled and their Windows Azure storage rendered read-only. SQL Azure CTP accounts and Windows Azure Storage CTP accounts will be deleted on March 1 and April 1, respectively, unless their owners choose to upgrade.

One small group, however, will be able to use Azure for free: On Feb. 4, Microsoft and the National Science Foundation (NSF) announced a program to provide NSF-supported researchers with no-cost access to the cloud platform and related development tools for three years. The NSF will review and award those grants, as well as manage the actual projects.

"Cloud computing can transform how research is conducted, accelerating scientific exploration, discovery and results," Dan Reed, corporate vice president of Technology Strategy and Policy and Extreme Computing at Microsoft, wrote in a Feb. 4 statement. "These grants will also help researchers explore rich and diverse multidisciplinary data on a large scale."

On Feb. 2, Microsoft also released a beta version of Windows Azure Drive, which lets users port their applications from a localized Windows environment to the Windows Azure cloud environment.

"Customers have told us they want to take their already running Windows applications and run them in the cloud using the standard Windows NTFS APIs, and make sure the data is durable," Brad Calder, a member of the Windows Azure Storage team, wrote in a Feb. 2 posting on the Windows Azure Team Blog. "With Windows Azure Drive, your Windows Azure applications running in the cloud can use existing NTFS APIs to access a durable drive. This can significantly ease the migration of existing Windows applications into the cloud."

Furthermore, Calder added, "The Windows Azure application can read from or write to a drive letter ... that represents a durable NTFS volume for storing and accessing data. The durable drive is implemented as a Windows Azure Page Blob containing an NTFS-formatted Virtual Hard Drive (VHD)."

During the beta period, customers will only be billed for storage space used by the Page Blob, along with any read-and-write transactions to the Blob. Windows Azure Drive APIs include Create Drive, Initialize Cache, Mount Drive, Get Mounted Drives, Unmount Drive, Snapshot Drive and Copy Drive; a full explanation about the APIs and their capabilities can be found here.

Microsoft is hoping that developers will gravitate toward its division of the cloud. During the company's Jan. 28 earnings call, CFO Peter Klein referred to Azure as a way for developers to make "a smooth transition to the cloud with tools and processes" that will allow them to build applications and other software. However, much of Microsoft's revenues are still firmly bonded to the desktop, and thus linked to PC sales; as the consumer PC market has returned to growth in the most recent quarter, the company saw its revenues increase, buoyed by strong sales of Windows 7.

The number of Windows 7 users rose in January, according to statistics firm Net Applications, which estimated a 7.57 percent market share for the operating system. By comparison, market share for Windows XP has been steadily declining since March 2009, when it held 75.02 percent of the market; Net Applications estimates that it now occupies 66.15 percent.

However, Microsoft plans on baking additional cloud-centric functionality into a number of its traditional desktop offerings. Stripped-down versions of the next editions of OneNote, Excel, Word and PowerPoint will be made available through the cloud to Windows Live subscribers, but those wanting higher-end tools will still need to purchase Office 2010 once that software suite is released in June. That move by Microsoft seems tailored to counteract a rising threat from cloud-based productivity suites such as Google Apps.

On Feb. 3, Microsoft made the Release Candidate of Office 2010 available to a select group of testers enrolled in its Technology Adoption Program, but has no plans to make that particular set of code available broadly. Microsoft had previously opened the productivity suite to general public beta testing, with some 2 million people downloading the software in seven weeks.

How Microsoft will integrate the cloud into its other desktop-based platforms, such as Windows, remains to be seen. Google plans on releasing a browser-based Chrome OS in late 2010, and that operating system's rate of adoption among both consumers and the enterprise could possibly affect Microsoft's choices in the development of Windows 8.

Although Microsoft is likely working on the next version of its operating-system franchise, Windows 8 remains vaporware-as does a "Zune Phone," a Microsoft-branded smartphone that the rumor mill has suggested will be unveiled at the Mobile World Congress in Barcelona later in February.

"Today we can confirm the existence of the Zune Phone from Microsoft," read a Jan. 27 posting on the Spanish blog MuyComputer. "Today we can confirm that the phone will be presented at the Mobile World Congress in Barcelona and that the device will be based on Nvidia's Tegra platform, which will accompany Microsoft in the coming-out."

That blog suggested that the device will weigh 2.4 ounces and feature a 480-by-272 screen resolution. While Microsoft declined to comment "on rumors or speculation" in this instance, the fact remains that the company is planning to roll out something mobile-related at the conference. Considering the extremely low market share for the Zune multimedia device, it seems an unlikely candidate for branding Microsoft's first in-house smartphone.

However, at least one analyst thinks that Microsoft will indeed debut a branded phone at either the Mobile World Congress or else March's CTIA in Las Vegas. "We expect Microsoft to debut its long-rumored -Pink' phone within the next two months," Jefferies & Co. analyst Katherine Egbert wrote in a Jan. 19 research note. "We believe the phone will be based on Windows Mobile 7, which has not yet been made generally available."

Although the rumors built this week around a Zune Phone or other device, Microsoft has remained tight-lipped about its plans for the mobile segment, where its market share has been withering under intense assault by a variety of competitors, including Apple's iPhone and Research In Motion's BlackBerry line.

Whatever Microsoft's ultimate strategy, though, it evidently plans to continue refining Windows Mobile 6.5, its smartphone operating system originally released in October: The new Sony Ericsson Aspen smartphone, which made its debut on Feb. 2, runs Mobile 6.5.3, which supposedly contains tweaks to its user interface and touch-screen capabilities. But more may be needed if Microsoft wants to prevent its market share in the space from continuing to erode.