Ballmer Talks Up 'Cloud Computing'

Published: July 18, 2007

by Alex Woodie

Microsoft later this year will unveil new software-as-a-service (SaaS) offerings that will enable business customers to build and adopt applications that run on large "geo-scale" server farms instead of servers installed on customers' premises, CEO Steve Ballmer announced last week at the company's annual partner conference in Denver, Colorado. Ballmer says Microsoft's partners will be instrumental in the coming wave of "cloud computing," which he also referred to as "software-plus-services."

Microsoft has been relatively slow to adopt SaaS computing, and its strategy, based largely on the Windows Live offering, has been criticized for being too little and too late compared to the SaaS offerings of Salesforce.com, the leader in CRM delivered over the Web, and Google, which has challenged Microsoft's desktop dominance with new Web-based productivity apps. An unwillingness to weaken its near-monopoly on desktop operating systems and traditional productivity applications, and a lack of clear leadership and decisiveness on the SaaS front, have been key elements hurting Microsoft's SaaS strategy.

While things won't change overnight, and a lot of questions have yet to be answered, Microsoft executives, and Ballmer in particular, last week let the world know that it is acutely aware of the business and technology shifts that are resulting from the popularization of the SaaS method. And with the announcements (or stated plans to make announcements) Microsoft appears to be moving in the right general direction--or, at the very least, the company is saying it's moving the tectonic plate that is Microsoft over the SaaS hotspot.

The evolution from DOS to S+S has been a long and bumpy one. "We grew up as a desktop company," Ballmer said during his keynote address at last week's Microsoft Worldwide Partner Conference 2007. "I never knew what a desktop company was. I just knew that we had a tattoo on our head that said Microsoft equals desktop company."

From 1988 on, Microsoft started saying it was going to be an enterprise company, Ballmer said. "And we worked at it, and we worked at it, and our partners, you worked at it, you worked it, and you worked at it. [And] about four or five years ago, people started saying, 'Microsoft is an enterprise company,'" he said.

Now, the world of computing is entering its next stage, which is marked by the delivery of increasingly sophisticated applications over the Internet, and it goes by several names, according to Ballmer. "The shorthand I like to use when we're talking about this evolution . . . is software plus services," he said. "Some people like to use software as a service, and I think that basically has certain implications that I don't think are right. Some people talk about Web 2.0; that's got other implications that I don't think are exactly right."

Microsoft's vision of software plus services blends four different phenomenon, Ballmer says. First, it must work with desktop-resident software (read: Windows and Office). Secondly, it must offer a rich Web-based user interface (which is where Microsoft's new Silverlight "Flash killer" comes into play). It must work in both online and offline modes, and include mobile and server components.

Microsoft is building a new software-plus-service platform to make "cloud computing" a reality for Microsoft, Ballmer says. "We are in the process today of building out a services platform in the cloud," he said. This new service-based infrastructure includes new models for management, development, storage, and networking.

"The programming model remains .NET and Windows, which is great, but we designed these things from the get-go to take advantage of modern technologies that allow for virtualization, scale-out, management, and the like," he said. "We're going to have a lot more to talk to you about in this arena in the next 12 months."

Microsoft is also building a series of interfaces to hook this "cloud infrastructure services" platform directly to applications from Microsoft and its partners. To that end, the company is devising ways to hook the new cloud platform into Windows Server, Active Directory, MOM, directory services, device management, collaboration, commerce, and search services, Ballmer said.

A big challenge facing Microsoft is satisfying various customer groups. On the consumer front, the company's cloud offerings will be Windows Live, Office Live, Popfly, Virtual Earth, and Live Search. Businesses will be presented with Office Live Small Business, hosted Exchange (which the company and its partners have offered for years), and CRM Live, which Ballmer debuted at last year's partner conference, and "Titan," the codename for the next release of Microsoft's multi-tenant CRM system. The software giant wants its enterprise partners to build software-plus-services on Titan, as well as its Dynamics ERP products. Exactly how this fleshes out will be interesting to watch.

"This is an ambitions project for us, but it's very important," Ballmer said. "As I said, we have a lot of news and things that we'll be talking about and unveiling for the first time in this area this year."

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