Azure: Can Microsoft Meld Windows with the Web?

The giant's bid to join the world of cloud computing is likely to appeal most strongly to corporate users

By Peter Burrows

After years of efforts by Google (GOOG) and Amazon.com (AMZN) to spin visions of a future where the Web supplants Windows, Microsoft (MSFT) struck back on Oct. 27. The software giant unveiled what one executive called the most important plan in 16 years aimed at keeping its Windows operating system franchise vital. "What we announced today was much broader than anything anyone has tried before," says Senior Vice-President Robert Muglia.

The project, called Windows Azure, was unveiled by Microsoft head techie Ray Ozzie during a conference for more than 6,000 Microsoft software developers at the Los Angeles Convention Center. Azure is an ambitious effort to create an operating system that allows for greater flexibility in using Windows—letting companies run some programs on their own computer networks while also commissioning Microsoft to dole out other tasks from its own massive data centers. If successful, Azure could transform Windows from a wasting asset to be defended at all costs into an offensive weapon that gives Microsoft advantages even Google can't match.

Indeed, Muglia compared the day's news to the 1992 launch of Microsoft's Windows NT, which enabled Microsoft to go from dominating desktop PCs into the much larger, more lucrative world of back-office corporate computing. That's because Azure could potentially affect the entire Net, from wonky programs used by companies to run their operations to consumer services doled out to teenagers' laptops and cell phones. While Microsoft has rolled out "live" versions of some of its programs in recent years that had Internet-based features, Azure is designed to be a common foundation on which they will all run. Gartner (IT) analyst David Mitchell Smith says "this is much bigger than NT. It's a tremendously broad and ambitious strategy. This is clearly about more than just competing with Amazon."

A Tip of the Hat to Amazon

That's a reference to Amazon.com's pioneering move into Web services of the sort that many pundits think will threaten Microsoft. The e-tailer rents various elements of an IT shop—basic computing, storage space, access to database programs—to thousands of Web startups so they don't have to invest in their own tech gear. The outsourcing of this wide range of computing tasks is known as cloud computing. "I'd like to tip my hat to Jeff Bezos and Amazon," Ozzie told the crowd. "All of us are going to be standing on their shoulders" in creating cloud-based businesses, Ozzie told the crowd. But Azure will go beyond providing a more efficient means of getting computing done, say Microsoft executives—it will also lead to a host of new services for companies and consumers.

No doubt, Windows is a powerful weapon, if Microsoft successfully uses it to improve its Web offerings. That's because a vast ecosystem of companies and people already know how to create and run Windows-based software. Azure could let them easily extend those programs to the Web. During the presentation, Jonathan Greenstead, CEO of a startup called Sentinent, showed how using Azure could enable his company to reach millions of consumers far more efficiently than if it had to build its own infrastructure to serve them.