Microsoft: The World’s Biggest Cloud Software Company?
Within the halls of Microsoft, a cordial but strategic debate is emerging. Some leaders within the company want Microsoft to describe itself as the world’s biggest cloud software provider. But other Microsoft insiders are being a bit more cautious and conservative, preferring to hold off on making such a statement to the masses, Talkin’ Cloud has heard.
Is Microsoft the world’s largest provider of cloud software — right now? Channel Chief Jon Roskill (pictured) made a pretty compelling case during an interview with Talkin’ Cloud and The VAR Guy last week. Roskill’s extensive views on Microsoft’s partner ecosystem will surface on The VAR Guy in the next few days. In the meantime, let’s take a look at Roskill’s cloud perceptions.
Microsoft vs. Google, Salesforce.com
Roskill concedes that some pundits consider Google and Salesforce.com the leaders in cloud computing. But he notes: Google really isn’t a software company, and Google Apps doesn’t generate much revenue for the search company. And while Salesforce.com is a pure-play cloud company, Roskill still thinks Microsoft has the upper hand when it comes to cloud revenues.
“If you start to look at revenue through all the related channels — hosters, direct, indirect, Office 365, Azure and more — at some point [Microsoft] will be comfortable to declare ourselves the leader in cloud software,” said Roskill.
That’s an intriguing point. Many independent cloud service providers and telecom companies now offer hosted Exchange. And hosted SharePoint seems to be coming on strong. One indication: Rackspace recently acquired a hosted SharePoint specialist to push into that market.
Meanwhile, Microsoft hasn’t said much about overall Office 365 cloud deployments, but Roskill remains upbeat. “Today we see a fair amount of Office 365 on our enterprise agreements,” said Roskill. “I don’t know what the timeframe is — the next year or two — but I fully believe [people will realize] we’ve got these amazing cloudified businesses like Exchange, SharePoint, Lync and Dynamics. They’re all doing extremely well.”
In other words, Roskill is predicting that Microsoft will likely declare itself as the cloud industry’s largest software provider by 2013 or 2014 — if not sooner.
Microsoft’s Cloud Partner Program
Roskill reiterated that Microsoft has about 42,000 cloud partners reselling Office 365 and other Microsoft online services. But Talkin’ Cloud asked: How many of those partners are really active and engaged with Microsoft on the cloud front? “If you dig into the numbers, I think you’ll find the 80-20 rule holds true,” said Roskill. “About 20 percent of the partners are driving a large portion of the seats. Others are engaging opportunistically.”
Roskill continues to evangelize two opportunities — Cloud Essentials and Cloud Accelerate — to channel partners. Cloud Essentials represents a low friction, low barrier to entry for channel partners. Cloud Accelerate is designed for partners that have dome three-plus deals and over 150 seats. Roskill says “thousands” of partners are now in the Cloud Accelerate camp, though he didn’t offer an exact number.
About 80 percent of Microsoft’s cloud partners are now managed partners, Roskills estimates, meaning that the partners are working closely with Microsoft’s channel account managers to drive more business.
Office 365: Improving Reliability?
To Microsoft’s credit, the Office 365 cloud suite seems to have gotten more and more reliable since launching in June 2011. Initially, Office 365 — the successor to BPOS (Business Productivity Online Suite) suffered multiple outages. But more recently, chatter about Office 365 reliability concerns seems to have quieted down in the IT channel.
Also to Microsoft’s credit, more than 40 percent of the world’s top MSPs say they are testing and/or deploying Office 365 for end-customers, according to the fifth-annual MSPmentor 100 report, published by our sister site in February 2012.
Competitive Landscape
Still, Microsoft faces fierce competition against Google, Salesforce, Amazon and other cloud giants. Indeed…
- Google Apps does seem to be gaining momentum with channel partners.
- Oracle is quick to note that the vast majority of public SaaS platforms — from NetSuite to Salesforce.com — run Oracle.
- And a range of open source options — Linux, Apache, MySQL — are widely popular in the cloud, though it’s difficult to pinpoint how much revenue they generate from commercial software companies.
Meanwhile, some partners remain wary of Office 365 because Microsoft controls pricing and end-customer billing. But it’s safe to expect Roskill to offer more momentum updates during Microsoft Worldwide Partner Conference 2012 (July 8-12, Toronto).
In the meantime, keep an eye on our sister site — The VAR Guy — for a more comprehensive update and interview with Roskill, who covered a range of partner topics during last week’s conversation.
Interesting approach–MS bases bigness not on the number of customers, but on revenue. So they’re bigger, because they charge a lot more than Google does.
Of course they’re guessing at Google’s actual Apps revenues, just like they make everyone guess at MS’s actual revenues from services like Office 365, so this interview is more about managing perceptions than delivering information
As Microsoft well knows, lower revenue is often the way to win. Netscape was a much “bigger” browser company than MS for many years because it still had a trickle of revenue coming in, even though Microsoft had vastly more market share because IE and IIS were free. How did they count “bigness” back then? Market share or revenue?