Steve Ballmer's Plan to Manage the Clouds

I've been watching and listening the Microsoft execs as they try to come up with their spin on cloud computing. It was Steve Ballmer speaking today (Monday, March 3) at CeBIT in Germany where I think he came the closet to the new Microsoft pitch.

What follows is not Ballmer's speech word for word, but my translation. Sort of like one of the press conferences here where you wear a headset for a simultaneous translation.

More and more of the big Microsoft competition is coming from the likes of Google offering applications sitting in the Internet cloud. Clouds are not going to go away and the twin drivers that make cloud computing work -- advertising-supported applications to allow you give the apps away for free and sufficient money to enable vendors to make big infrastructure investments -- are now a key part of Microsoft strategy.

The difference as more and more frequently articulated by the Microsoft execs is that while the cloud is an opportunity for enterprise customers, managing the apps coming from that cloud to the user's desk is required, important and where Microsoft will differentiate itself from the Googles and Salesforce.coms.

The announcements at CeBIT are good examples of the "software plus services" strategy as Ballmer defines it. Users can escalate their way from free services (the company announced it is making a free copy of Search Server 2008 available for download) all the way -- in the case of search -- to an upcoming high-end enterprise search product based on the company's recent acquisition of Fast Search & Transfer, of Oslo.

"In a sense you can say our strategy with all online services is to allow customers to take advantage of the power and capability of the cloud while retaining the control that the enterprise needs," Ballmer said at the CeBIT press conference.

The Microsoft strategy would resonate with a number of corporate technology execs I've spoken with recently. While they recognize the ease of deployment and simplicity of applications sitting out in the Internet cloud, they are well aware that management of applications and the ability to store and report on corporate computer activity is both necessary and often a legal requirement. Google and the others are weak in the application management area, and that is where Microsoft can find an advantage.