Facebook Bing Alliance, TechEd, Cloud Contracts Marked Microsoft Week

Microsoft's week involved a high-profile cloud contract with San Francisco, a deeper Facebook partnership on Bing, and new cloud and Windows Phone news.

Days after a hiccup in its cloud-based BPOS service cut business clients off from email, Microsoft announced that it had closed a deal with the city and county of San Francisco to port 23,000 municipal employees to the company's cloud.

The San Francisco deal had been in the works long before the BPOS outage, but the two events' closeness in time helps illustrate the challenges-and possible benefits-for Microsoft as it pursues an "all-in" cloud strategy.

San Francisco had apparently considered Lotus Notes and Google as possible email providers, but ultimately went with Microsoft because it provided interoperability with other software, including Windows Azure applications and Office products such as Word and PowerPoint. City executives on a May 18 conference call suggested that the initiative would cost $1.2 million per year, which breaks down to $6 per month per user; the transition to the platform will continue over the next year.

Those sorts of big government contracts are useful as Microsoft attempts to expand its revenue base beyond traditional desktop-bound software such as Windows and Office. For much of the past year, Microsoft CEO Steve Ballmer and other executives have been talking up subscription-based platforms such as Office 365 (the rebranding of BPOS) and Windows Azure as the wave of the future.

That cloud emphasis is threatening to ram Microsoft head-on into Google, whose business model also depends on pushing cloud services to businesses and municipal governments. The competition has become so intense that Google even sued the federal government after the Department of the Interior allegedly denied its bid to update an email and messaging system-a $59 million, five-year contract that had gone to Microsoft's BPOS-Federal suite.

But with the cloud comes outages. BPOS customers reported message-delivery delays of six to nine hours May 10, followed by another delay May 12. Responding to that, Microsoft claimed in a May 12 posting on the Microsoft Online Services Team Blog that it had initiated some corrective measures in the wake of the BPOS outage, including steps to streamline its communications with users.

Whether on-premises or in the cloud, though, the occasional outage seems like something most businesses accept as a matter of course. "Email outages, unfortunately, are something that's happened to us before," Jon Walton, city and county of San Francisco chief information officer, told media and analysts during the May 18 call. He added that the BPOS message-delivery delays had "only impacted us for about four hours."

Microsoft's task is to sell as many companies and governments as possible on the new model, and ease any concerns they might have about other things like outages. To that end, executives at this week's Microsoft TechEd North America 2011 conference in Atlanta spent much of their time talking through how to build, deploy, manage and scale applications for the cloud and devices.

Microsoft also spent much of this week talking up Windows Phone, including the resumption of updates for the Samsung Omnia 7 and Focus smartphones. Earlier this year, Windows Phones experienced several hiccups related to updates, with Samsung smartphones, in particular, having trouble receiving and installing new software.

"Today, we restarted updating Omnia 7 phones," Eric Hautala, general manager for Microsoft's Customer Experience Engineering, wrote in a May 17 posting on The Windows Blog. "The restart is happening in phases. Go to the Zune software and manually check for an update."

For those who didn't receive an update May 17, "look again next Tuesday when we plan to deliver updates to additional Omnia 7 customers."

Microsoft this week also highlighted some business features coming to Windows Phone with its next software update, code-named "Mango," due later this year. Those productivity enhancements include the ability to pin email folders to the smartphone's start screen, search a server for email items no longer stored on the device, force emails to obey IT administrators' policies and have email replies threaded into a "conversation view." Users will also have the capability to save and share Office documents via Office 365 and Windows Live Skydrive.

Windows Phone sold 1.6 million units in the first quarter of 2011, according to new data from research firm Gartner. That suggests Microsoft has a hard road ahead as it seeks to compete with the Apple iPhone and the growing family of Google Android devices, although analysts feel that Nokia's recent decision to replace its homegrown Symbian OS with Windows Phone could contribute substantially to Microsoft's customer base.

In the meantime, Microsoft finds itself faced with some worrisome numbers in the smartphone arena. New data from Nielsen had 6 percent of consumers indicating they wanted a Windows Mobile/Windows Phone smartphone as their next device, compared with 31 percent for Android, 30 percent for Apple's iOS and 11 percent for Research In Motion's BlackBerry. Microsoft can perhaps take consolation in the fact that, as with the cloud, smartphones are ultimately a very long game.

On the search engine front, Microsoft announced this week a deeper partnership between its Bing search engine and Facebook. The new, Facebook-fueled features will include the ability to see, in search results, which Websites your friends "Liked." Those Websites will also find their way toward the top of search results, instead of being buried three or four pages back. If your friends have "Liked" a certain part of a Website, such as a recipe, that page will surface along with the Website in search results.

When users search for a specific person, Bing will now present Facebook information on the search-results page. If they're traveling to a new city, such as Paris, Bing will tell you which Facebook friends live there. Bing will notify users of airfare deals for places they've liked on Facebook, and let users post Bing Shopping pages on their Facebook wall ("Should I buy this?").

Those added social features could help Bing as it battles Google for search-engine market share. According to recent data from comScore, Bing's share of that market stands at 14.1 percent, compared with Google at 65.4 percent.