Microsoft has taken the wraps off its business and partner models for Windows Azure -- a services platform that enables computing applications to be hosted and run at the software giant's data centers.
Through Windows Azure, Microsoft expects to help customers and partners quickly develop and deploy cloud-based computing solutions, said Bob Muglia, president of the server and tools business at Microsoft.
"What's unique about the Windows Azure platform is that Microsoft manages the complexity, which allows partners to focus on what matters most for their business -- building innovative services solutions and driving new revenue," Muglia said. "This can drive down total cost of ownership by up to 60 percent for certain workloads during a three-year period."
Pay as You Go
Microsoft will offer Windows Azure under a pay-as-you-go pricing model where customers will pay only for the services they consume. Microsoft plans to charge 12 cents per hour for computing, 15 cents per gigabyte stored, and one cent per 10,000 storage transactions.
The Azure platform includes a Web-based relational database in Microsoft SQL Azure together with connectivity and interoperability with .NET services. Microsoft said it will charge $9.99 for the basic Web edition of its SQL Azure database, which includes up to a one-gigabyte relational database; and $99.99 for the business edition with up to a 10GB database. By contrast, .NET services will be 15 cents per 100,000 message operations, including service-bus messages and access-control tokens, the company said.
And when it comes to network bandwidth, Microsoft said it will charge between 10 and 15 cents per gigabyte for Windows Azure, SQL Azure and .NET services. The software giant also rolled out an enterprise-class guarantee backed by a service-level agreement that covers service uptime, connectivity and data availability for all three services.
"What is interesting about the announcement was that Microsoft has put up pricing and service levels for Azure that are quite attractive to me," said Frank Gillett, a vice president and principal analyst at Forrester Research. "Microsoft has taken a step in the right direction."
However, Gillett cautions that prospective customers cannot simply compare Microsoft's prices with those of cloud-computing rivals Amazon and Google. "You also have to look at service levels," Gillett said. "There is no direct comparability of the compute offerings, and that's because of the differences in the way people measure levels" of performance.
A Business-Model Shift
The good news for Microsoft and its partners is that interest in external cloud-based computing solutions is on the rise. "Overall, the market is absolutely interested, but we are still at a very early stage," Gillett said.
Though the software giant has entered the market late in comparison with Amazon and Google, "Microsoft is doing just fine," Gillett said. "We are just at the beginning of this. It is like talking about the Internet in 1995."
The challenge for Microsoft is ensuring that it maintains a balance between its new cloud offerings and its current on-premises enterprise business. "It is going to be a shift in their business model because it is different when you charge one time for a software product as opposed to charging for a service," Gillett said.
On the other hand, Gillett thinks it's not going to be an either/or proposition for Microsoft because customers are going to be using both on-premises software and services in the cloud. "Microsoft has expanded what they are offering to their customers, who can go with a combination of things," Gillett said. "That's what is so powerful about what Microsoft is doing."
Microsoft has chosen an approach that embraces these new types of offerings but in a way that does not handicap its existing business, Gillett observed. "They are using their strengths in products to enable customers to take advantage of the new services," he said.