How Microsoft will Force you “To the Cloud” (Part 1-What)

Does that headline sound like hyperbole? Maybe it is, maybe it isn’t, you will have to decide after this series. I have been watching the machinations taking place; both from the sidelines, and in the huddle as a Microsoft Cloud Partner . I have no true “Inside Information”, but I did put some tea leaves in a coffee cup, and this series is about what I saw.

I decided to break this up into a series for a couple of reasons, first I wanted to tackle each aspect separately, and second, I can get several blog posts out of it, which if you write a blog you know, is a good thing.

So let’s start with “What” Microsoft is doing. First, they are playing “catch-up”. They were getting their asses kicked by Apple, Google, Salesforce.com and a host of other cloud based solutions, all vying for a piece of the Microsoft Empire. A few years ago, you could not even think about trying to compete with Microsoft on their core products; Microsoft Office and Exchange (it is rumored that Office generates 80% of Microsoft’s revenue). The defacto standards for email and productivity for 20 years now have been “owned” by Microsoft. To even attempt to develop a worthy alternative would cost a fortune, and then you have to get it in the hands of users. Over decades, Microsoft has built an army of over 700,000 partners knocking on doors and pushing their products into every corner of business, large and small. How do you compete with that? You don’t, at least not on their playing field.

Enter the cloud, and the new concept of free applications. Need email? get Gmail for free, “It’s kinda, almost as good… sorta, but hey, it’s free”. “Free” will always have appeal. And here comes Google Docs. “It will do the same thing as Office… if you don’t do very much with Office; who needs pivot tables anyway?”, but again, it’s free. Here’s another angle, “it’s cheaper to develop a cloud solution“. Granted companies like Salesforce.com have spent a fortune to develop a cloud version of Dynamics CRM, but there are fifty other little companies that have developed cloud based “sorta” CRM systems. And then there’s the whole “Open Source” movement which is now almost all cloud. People developing full-blown applications, for the pride of having their name on it, no money required.

This “cloud” thing had been building steam for a while, and the sleeping giant basically ignored it. Content that “real” businesses would never go “cloud”… but then… they started to. First, simple economics; cloud was costing them less. Sure they had to make some compromises, but the savings were worth it. Over time as cloud kept growing the applications got better, the infrastructure got better, the security got better, and today the compromises are few, if any, just savings. As word spread, more companies began to move and Microsoft started watching the mass exodus of their client base. Finally, the giant awakes… better late than never.

They still have the products that people want, they just were not delivering them in the way people now wanted. But with a war chest of a gazillion dollars, baldy said Let’s do it“. Their first effort was purely defensive: BPOS (Business Productivity Online Standard Suite) which included Microsoft Exchange Online; Microsoft SharePoint Online; Microsoft Office Communications Online for presence availability, instant messaging, and peer-to-peer audio calls; and Office Live Meeting for web and video conferencing. BPOS was a flop, Microsoft had not gone far enough, and in their rush to market, offered up a half-baked solution.

But BPOS did prove something to Microsoft… this “cloud” stuff is in-demand. Even a crappy product was selling. Baldy Ballmer starts dropping the “C” word into his presentations more and more, and was obviously encouraged by the smiles he was seeing back. One day, while sitting in one of his twelve mansions, he gets a brainstorm. “If we threw everything we’ve got behind cloud, we could “own” it! (Microsoft likes to “own” things.) “We already have all the software that people want, grew up on, and know how to use, we’ll just throw it up in the cloud”.

<Author dramatization> King Ballmer comes back to his office and gathers the troops and proclaims, “We’re all in on cloud“. To which someone replies, “I thought you said “Let’s do it” a while back”. “Yeah, but I mean it this time, we’re throwing everything we got up in the cloud”. “But, your majesty, we “threw up” BPOS and it fizzled”. “Damn, you’re right, so what do we do?” “Well sir, we can’t afford another slip-up, we will have to take our time, do it right, and go far enough this time”. “Hmmmm… that sounds like a lot of money”. “Yes, your highness, I estimate a Gazillion dollars”. “What!, that’s like .002% of our net worth… but we have no choice, I want to win this war”.

This was obviously incredible news to the Microsoft development army, who had run out of ideas for upgrades (“I know, let’s change the font size from 11pt to 12pt!”). They were more than ready for a “real” assignment. Their first step was to replace BPOS before the world decided it was the best they could do. “It’s gonna cost a lot of money boss”. “I know, just do it, we’re in a war here”. The concept of BPOS was re-thought, re-engineered, re-built from the ground up and re-branded as Office 365. Office 365 was launched in beta in October of 2010, and launched in general release in June of 2011. That was 8 months of beta testing, a lot for a whole new product, but a whole lot for a rebuilt product, but Microsoft knew they had to get this one right… or else.

Once the mothership was launched, they took what they learned and started launching cloud versions of their products and snapping up cloud applications like Skype and Yammer at a rapid rate. Microsoft is accelerating into the cloud at a speed that has caught the cloud status quo off-guard. I thought I overheard Benioff say “I didn’t know a sloth could run that fast“.

Make no mistake, Microsoft wants you in their cloud, whether you are using their on-premise stuff or you left Microsoft for someone else’s cloud, Microsoft and their Partner army is coming for you.

Next post: Why?

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