Microsoft's big grab for the cloud

It's game on for Microsoft, which is marshalling its resources for a high-stakes gamble on cloud computing

Remember when Steve Ballmer made this statement? "About 70 percent of our folks are doing things that are entirely cloud-based, or cloud inspired," he told an audience at the University of Washington last March. "And by a year from now that will be 90 percent."

At the time I thought: Yeah, right.

[ Also on InfoWorld: Read Woody Leonard's musings about whether Ballmer will bail after banking big bucks. | And check out Neil McAllister's comparative review of "Office suites in the cloud: Microsoft Office Web Apps versus Google Docs and Zoho." ]

The cloud is so difficult to define, and Microsoft's cloud offerings had been so slow to emerge, I couldn't bring myself to believe that claim, especially with Ballmer's "cloud inspired" locution leaving several football fields of wiggle room. For those reasons and more, two weeks ago I pretty much dismissed the announcement of the forthcoming Microsoft Office 365 as a repackaging of Microsoft BPOS (Business Productivity Online Services), a cloud offering that has failed to get much traction.

But the scales have fallen from my eyes. I've done a complete 180. I am now convinced that Office 365, Windows Azure, and Windows Phone 7 together are Microsoft's monster play to dominate cloud computing.

Why? A few reasons. Eron Kelly, senior director on the Microsoft Online Services team, recently told me that while people like me were saying that Microsoft lacked a cloud strategy, the company was busy learning valuable lessons from two years of BPOS deployments. Meanwhile, it has been building the infrastructure to handle many, many cloud customers. Microsoft is prepped.

Plus, with Office 365, users can opt for the $16-per-month E2 version, which does not require Office to be installed locally on their system. If users like, they can use Office Web Apps as their primary productivity suites just as they might use Google Apps (albeit at nearly four times the price of Google Apps Premier).

Then there's the obvious question: Where else does Microsoft have to go but the cloud? No one wants to upgrade to get the nth feature of Office or Windows anymore. But cloud services, if they're compelling enough, provide a robust revenue stream. Building out cloud services is the key to Microsoft's survival as a company.

Now, don't get me wrong -- I have no idea if Microsoft's plan will work. We won't see a beta of Office 365 for a couple of weeks, much of the new Azure stuff has yet to roll out, and Windows Phone 7 will need an iteration or two to catch up with iPhone and Android. But Ballmer says that Microsoft is "all in" with cloud computing. This time, I believe him.

This article, "Microsoft's big grab for the cloud," originally appeared at Read more of Eric Knorr's Modernizing IT blog and get a digest of the key stories each day in the InfoWorld Daily newsletter and on your mobile device at

Copyright © 2010 IDG Communications, Inc.

InfoWorld Technology of the Year Awards 2023. Now open for entries!