Can Microsoft Properly Host Its Own Cloud Applications?

Can Microsoft Properly Host Its Own Cloud Applications?

Consider the following scenario: You're a managed services provider. Instead of investing big bucks to build your own hosted applications, you entrust your end-customers to Microsoft's cloud -- including Exchange Online and SharePoint Online. But in the past few weeks, that Microsoft cloud -- called BPOS (Business Productivity Online Suite) -- has gone dark at least three times. The big question: Will end-customers remain patient amid Microsoft's SaaS growing pains? Or is there something fundamentally wrong with Microsoft's hosting strategy?

To understand Microsoft's most recent cloud challenges, check out Mary Jo Foley's All About Microsoft blog. In it, Foley describes Microsoft's most recent outages, and Microsoft describes what went wrong and some of the potential corrective measures.

Please note: Generally speaking I'm optimistic about Microsoft's cloud strategy. I think Windows Azure holds a lot of promise. And despite potentially thin margins for partners, I see why end-customers potentially value hosted versions of Exchange and SharePoint.

Software Development vs. Application Hosting

But here's the challenge: Some skeptics say Microsoft is a software development company rather than a hosting company. And yes: There's a big difference between...
  • (A) writing code for a living; and
  • (B) building massive, mission-critical data centers that host applications for customers.
Given Microsoft's most recent BPOS bumps, I'm starting to wonder: Should Microsoft pull the plug on BPOS, leaving the hosted Exchange market to big service providers and hosting provider specialists? Such a move would mitigate some of the cloud channel conflict that Microsoft currently faces with partners.

Microsoft could, after all, emulate Oracle's cloud strategy. Oracle CEO Larry Ellison has avoided the temptation to build an Oracle cloud. Instead, Oracle has introduced service provider pricing to hosting partners, under the direction of Kevin O'Brien, senior director of ISV and SaaS strategy for Oracle. Take a close look at the top 20 or so cloud software companies, and the vast majority (if not all of them) run Oracle software behind the curtains.

Can't Quit Yet

Ultimately, I think Microsoft will get BPOS right. And I think Windows Azure will provide even better opportunities for partners and ISVs. But I wonder: How many SaaS and cloud outages can Microsoft experience before a few customers and partners start heading for the exits?

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