I applaud Microsoft's foray into cloud computing with the Azure server, but it still leaves me puzzled. Having been a part of the Microsoft culture for so many years, I can see what is going on. There is this perpetual nagging drive to deliver more features and create new waves, when what is needed now is to leverage existing assets and ride the waves of consumer demand.
Microsoft is sitting atop a cloud computing gold mine today with the ultimate software-plus-service "Windows Update".The old-school mentality is to deliver shrink wrapped software as a one-time transaction for a low price. They then give away monthly security updates, ongoing patches, and lot's of free development tools.
Because of the rate of change in todays networked world, there is now more value in subscribing to an evolving software service than in a one-time "buy and forget" transaction.
Most households would probably think nothing of paying $4.95 per month for Windows update if there were no upfront costs. That may seem like small change, but over 5 years that subscription model yields almost $300.
Plus consider how many bootlegged copies of Windows are running out there (50%+). By minimizing entry costs, demonstrating continual value, and associating key features with genuine installations will encourage more consumers to subscribe.
Businesses, likewise, would find a $10 subscription for Windows and Office much more attractive than a one-time purchase.
But here's the thing that really has got me puzzled. Why is Microsoft building it's own datacenters and talking about becoming a centralized service when it has built an army of loyal and eager partners that will install, deploy, and manage Internet nodes for them?
Google is a fantastic company, but their ability to scale is limited by their ability to raise capital and dedicate internal resources to building datacenters.
If all Microsoft Internet Node Servers (MINS) shared a common API, if all applications written for MINS were portable, and if all existing Microsoft datacenters and partners filled their racks with these servers, Microsoft would not have to spend a dime building datacenters. They could then return to their core competency of writing OS software and applications and leverage the power of their channel partners to scale.
(Alright, so maybe Microsoft Marketing could come up with a better acronym than MINS... but letting partners be their cloud computing 'minions' should be implicit ).
Revenue from Microsoft Internet Node servers would far surpass consumer windows subscriptions within 10 years if this model were deployed.
As an example, I just signed up for Amazon EC2 today to deploy a new email server. I don't know how much of the $0.125 per hour Amazon charges me gets kicked back to Microsoft, but it makes me wonder.... why is Amazon having to develop new Windows OS extensions to make their provisioning model work and why is Microsoft building datacenters like they're going to compete with Amazon?
It's just all backwards. The obvious win-win scenario is for Microsoft to develop a provisionable server OS and partner with the Amazon's and Rackspace's of the world to do the hosting.