Microsoft Courting SPs as Cloudmates

Microsoft is making a major push to be the partner telecom service providers turn to when taking the leap into cloud-computing services. In announcing its new Windows Azure platform appliance today, the software giant stressed the ability to enable easy deployment of on-demand IT capacity and new applications-as-a-service offerings for Microsoft Office apps and more.

Microsoft also was able to announce five new service provider customers -- BCE Inc. (Bell Canada) (NYSE/Toronto: BCE), BT Group plc (NYSE: BT; London: BTA), Telenor Group (Nasdaq: TELN), TDC A/S (Copenhagen: TDC), and Premiere Global Services Inc. (PGi) -- none of which is US-based.

"These new customers, in addition to some large players that are already partnering with us, such as Telstra, Vodafone, [and] Orange, are a really strong signal that large service providers are engaging the cloud," says Stephen Elop, president of Microsoft's Business Division. "The US is an area where we are not ready to make an announcement at this time."

A strong advantage for Microsoft in partnering with service providers is the extension of its Business Productivity Online Suite (BPOS) into the small to mid-sized businesses with which it doesn't have direct relationships. BPOS includes online versions of popular Microsoft business software including Exchange, SharePoint, LiveMeeting, and Office Communications.

"The service providers give us a very specific opportunity to broaden our reach to the small to mid-sized business, because they are not only offering out services but bundling those services with what they provide into a complete small business offering," Elop says. "They can provide a direct reach to customers who Microsoft doesn't traditionally reach, at least not efficiently, with a complete proposition."

Bell Canada is using the Microsoft cloud offerings to do just that -- reach small to mid-sized businesses that are actually first movers on cloud computing, according to Paul Rowe, VP of enterprise marketing.

"Getting our very largest customers to move [to cloud computing] will take more work," Rowe said. "But our small to mid-sized customers, they are adopting now. We are very excited about having this offering because we can create a wider value proposition for those customers."

Bell Canada is bundling the BPOS services with its voice, MPLS, and Internet services, initially using Internet connections into Microsoft's data centers for the cloud offering, Rowe says. As volume grows, BC will shift to a dedicated link into Microsoft's data centers and eventually hopes to host the software in its own data center, if demand is sufficient.

The appeal of these hosted offerings is that they offer businesses the ability to have on-demand access to services and to pay for what they use, meaning they can turn up or turn down the amount of IT resources they consume as needed, Elop says.

"Clearly our customers like the simplicity and the flexibility of it," Rowe says.

He admits businesses that get used to buying cloud computing on-demand are likely to want network services delivered in the same manner, and believes that when fiber is widely deployed and services can be logically turned up or down as needed, that bandwidth-on-demand will be expected. Today's copper-based connections don't have that flexibility.

For Microsoft, service provider customers represent access to markets the software giant wouldn't necessarily get into on their own, Elop says. And, he stresses, Microsoft isn't competing with service providers by offering over-the-top services that ride broadband pipes without paying.

"Service providers are increasingly turning into multifaceted strategic partners of ours," says Elop, referring to Microsoft's other SP connections, which include its Mediaroom IPTV offering, its online services, and its wireless push. (See Microsoft 'Hell-Bent' on Major Mobile Push.)

— Carol Wilson, Chief Editor, Events, Light Reading