By Nicholas Kolakowski  |  Posted 2010-12-23 Print this article Print



Throughout 2010, Microsoft has pushed what it calls an "all in" cloud strategy, which mostly involves pushing a variety of cloud-based IT services to both corporations and consumers. That strategy seems in part a response to companies such as Google and, which forcefully argue that Microsoft's desktop-centric software model is rapidly becoming outdated.   

However, Microsoft executives argue the company is well on its way to embracing the new paradigm. It insists that Azure, its cloud-development platform, boasts more than 10,000 users. Under the "all in" cloud strategy, Microsoft has increasingly positioned itself as the company whose subscription services can remove much of the cost and complexity associated with on-premises IT infrastructure. In addition to those services, Microsoft is also planning a program, code-named "Dallas," that will pull together enterprise and cloud data in a way that allows companies to make more informed decisions-which will allow Microsoft to compete more heartily in the analytics category against both IBM and Oracle.   

"There's nothing bad for us in the trend. It's all good," Ballmer insisted during the D8 Conference in June, in response to a question about the cloud's challenges for Microsoft. "But it's a transition, and as such it's a period of tumult. So we need to be smarter and more vigilant. But not because we're moving from a world that's fundamentally good for us to a world that's not. We're moving [from] a world that's good for us to a world that's potentially even more good [sic] for us."  

In June, Microsoft first announced the availability of Office Web Apps, which offered stripped-down versions of Word, PowerPoint, Excel and OneNote via the cloud. This arrived as the company ramped up toward the release of Office 2010 and SharePoint 2010, the next versions of its flagship productivity software.

A few months later, in October, Microsoft offered a glimpse of the cloud-based Office 365, which consolidates Microsoft Office, SharePoint Online, Exchange Online and Lync Online onto a unified platform. "With Office 365, we're delivering everything we know about productivity as a subscription service," John Betz, Microsoft's director of product management for Business Online Services, told an audience during an Oct. 20 session at the Gartner Symposium/ITxpo 2010. "We're also updating the back ends of Exchange Online, SharePoint Online and Lync Online to the 2010 version."

Microsoft also touted Office 365 as a customizable platform, allowing companies with simpler needs to access fewer products for a lower monthly fee.

With the strengthening of its cloud-based productivity and communications offerings, Microsoft has found itself in increasing conflict throughout 2010 with Google, which competes for many of the same enterprise and government contracts. In October, New York City Mayor Michael Bloomberg and Ballmer announced a partnership that would bring BPOS (Business Productivity Online Suite) to around 30,000 city employees. That followed Google's own agreement to provide cloud-based applications to City of Los Angeles employees.

A recent survey by IDF Research Services suggested that 75 percent of companies are either integrating cloud-based solutions into their IT infrastructure, or plan to do so over the next five years. In conjunction with moves toward cloud services by various government entities, that means an increase in the pool of contracts potentially available to both Microsoft and Google-and to their competitors.

"There's no doubt that businesses are talking to Google, and hearing their pitch," Tom Rizzo, senior director of Microsoft Online Services, blogged Dec. 1 in response to Google's winning a contract to provide Gmail and Google Apps to the General Services Administration, "but despite all the talk, Google can't avoid the fact that [often] they cannot meet the basic requirements."

Even as Microsoft plunged into the cloud, though, it lost one of the key figures arguing for the transition: Chief software architect Ray Ozzie resigned Oct. 18 for undisclosed reasons.

"With our progress in services and the cloud now full-speed ahead in all aspects of our business, Ray and I are announcing today Ray's intention to step down from his role as chief software architect," Ballmer wrote in an e-mail that day. "He will remain with the company as he transitions the teams and ongoing strategic projects within his organization."

Ozzie's departure made him the latest in a series of executives to leave Microsoft during 2010. In September, Microsoft Business Division president Stephen Elop had stepped down to take the CEO reins at Nokia, and an earlier shakeup within the company's Entertainment & Devices division had seen the departures of both Robbie Bach, that unit's president, and J Allard, its senior vice president of design and development.

But Ozzie had been responsible for the entire company's spearhead into cloud and social-networking spaces. His FUSE (Future Social Experiences) Labs incubator had focused on software related to social-connectivity, real-time experiences and rich media; its initiatives included, which allows Facebook users to create and share Word, Excel and PowerPoint documents with PDF support and full-text search. His departure, coming in the midst of such a massive paradigm shift, was somewhat startling.

Nonetheless, Ballmer in October defended Microsoft's ability to proceed into the cloud without Ozzie. "We've taken a strategic direction anchored in the cloud," he told an audience at the Gartner conference. "That vision is our company strategy. It doesn't live in any one head or mind."

Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.

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