Cloud Awakens Microsoft’s Server And Tools Giant

Focus on the cloud

However, Microsoft’s biggest single focus is the cloud. Like a rudder steering the software giant’s overall direction, cloud computing is now behind almost every move Microsoft makes. And Server & Tools has taken full advantage of the push toward the cloud. Not only is Microsoft’s core cloud computing play, Windows Azure, part of the Server and Tools business, so are new technologies such as Appfabric, as well as mainstays BizTalk and Windows server.

Moreover, baked into Microsoft’s developer story for the cloud is .NET, along with the flagship Visual Studio development platform, and the Silverlight environment for building rich media applications. Despite Microsoft clearly pushing its business solutions and services to the cloud, the company’s Server and Tools offerings are perhaps in a front-runner position as they actually enable the move to the cloud.

Al Hilwa, programme director for application development software at market research firm IDC, said Microsoft’s performance with its Server and Tools business is all the more impressive because it is one of the least “sexy” parts of the business.

Hilwa, who was in attendance at the FAM event, said: “Server and Tools is probably Microsoft’s least sexy business. But if you look at the numbers this is a business that has delivered solid growth in a highly competitive space. They probably can count more big competitors in this space than in any of their other businesses, which really makes these gains even more impressive.

“What is happening here is that they have built this business from practically nowhere some 10 years ago and truly leveraged their client strengths to muscle into a difficult space. For example they sell servers to leverage their growth in SharePoint and Office Communication Servers, which are great growth drivers. They have also benefited from a good rebound in IT spend in the Enterprise while being largely insulated from the ups and downs of the consumer sector. Finally, in the last few quarters they have had excellent comparisons with some of the worst quarters in the server business earlier in 2009.”

Meanwhile, “We’re going to lead with the cloud,” Turner said. “We are absolutely leading with the cloud to our customers. If you want on-premise software we have that, but we are going to lead with the cloud. Leading with the cloud actually helps Microsoft to sell more on-premise software than we have before.”

Microsoft’s “triple play”

Turner said Microsoft will focus on three main things: Driving the Windows 7 and Office 2010 refresh, driving customer satisfaction, and growing the company’s share.

“We see this opportunity with these old versions out there – XP and Vista,” Turner said. Microsoft also is going after older versions of IE. “We grew share in the browser space for the first time in a long time,” he added, noting that he considered Windows 7, Internet Explorer (IE) 8/9 and Office 2010 to be Microsoft’s “triple play.” And “Everybody in this company has a quota for going after some of these old versions,” he said. Turner also said a beta of IE 9 will be available in September.

Turner then spoke of competing with Microsoft’s core competitors including Google, Linux, VMware and Oracle. And, reiterating much of what he said at Microsoft’s Worldwide Partner Conference earlier in July, he cited several customers who had gone to Google for cloud services, but came back to Microsoft for its BPOS technology – including Serena and Datatune.

Turner also announced new wins with the Dow Chemical Co., Hyatt hotels and resorts, and the University of Georgia.

Meanwhile, Craig Mundie, Microsoft’s chief research and strategy officer, said, “The combination of the client and the cloud to create the new computing platform that will redefine both how people develop applications and ultimately how people consume them and what kind of things are possible to solve.”

Added Mundie:

“As Kevin reinforced, we’re all in on the cloud, we recognise that it’s an integral part of how we want to provision computing capabilities. What I think many people missed over the last few years in the discussion of how the cloud itself was going to evolve and would it ultimately displace or replace everything was that it’s really the composite platform that you get by taking these intelligent clients and their evolution, coupling them up through broadband connectivity to the incredible assets that we have in the cloud, and giving people a common new programming model to think of them as one integrated platform, not two things that were developed disjointly and which people use in an ad hoc way.”