Original URL: http://www.theregister.co.uk/2010/07/12/microsoft_massive_reorg/

Major Microsoft re-org to avert Windows' cloud cannibalization

Talisker money maker for on-premises Azure

By Gavin Clarke

Posted in Software, 12th July 2010 05:02 GMT

Exclusive Microsoft's $14bn server and tools unit has undergone a major shake up in order to squeeze money from the Windows Azure cloud without cannibalizing Windows Server and tools.

The unit has ramped up product and business development executives whose goal is to quickly build sellable products and services and sign up ISV and developer partners, according to internal Microsoft emails seen by The Reg.

Furthermore, under the re-org, Microsoft has accelerated plans to let people outside of its own data centers run versions of the Azure computing and storage fabric – something Microsoft had until now resisted.

Fresh resources have been allocated to Project Talisker, a months' old initiative to build and sell versions of Azure that customers and hosting partners can run on their own premises.

A brand-new communications unit has also been created to try and push a unified and consistent cloud-computing message spanning all S&T products and services. The unit – under a former internet explorer general manager and senior product director Amy Barzdukas – will pound press, analysts, and customers using public and analyst relations and executive speeches.

Normally, communications are carried out on a product-by-product basis, but the Barzdukas' unit stands in its own right and has been equal ranking with S&T's infrastructure marketing, business platform, and developer marketing units under Bob Kelly, Eduardo Rosini and Eddie Amos.

All four report to overall S&T marketing vice president Robert Wahbe, who continues to report to S&T group president Bob Muglia. The move means Microsoft is taking a leaf from IBM's book of marketing so-called "solutions" that wrap in disparate and integrated products.

Amos' developer marketing, meanwhile, has taken ownership of technical computing – created in May under general manager Bill Hilf – to win developers to Windows-Server based HPC and block them going to Linux. Developer marketing is also home to Visual Studio and Silverlight.

"We are moving the Technical Computing group... to recognize that the key battle for Technical Computing is winning developers to our platform," Microsoft's emails said.

Also, a joint data center virtualization and platform team has been created to compete with Linux and Unix.

The massive overhaul is already been put into effect, for Microsoft's new fiscal year that began on July 1.

Microsoft is expected to start by hitting partners with the cloud message at this weeks' World Wide Partner Conference in Washington, DC, where Wahbe and Muglia will keynote.

According to the Microsoft emails, the shake-up is designed to make money from Azure and cloud by spanning S&T's diverse products. The company believes it has "opportunity to grow significantly in the Tier 1 Enterprise" and cloud but that it's also under "intensive competitive pressure" from VMware, Oracle, and LAMP – the open-source stack of Linux, Apache, MySQL and Perl, PHP and Python rocking the cloud.

Until now, Microsoft has tried to attract PHP developers to Azure and Windows Server by making PHP and Azure and Windows work better together at a programming and deployment level.

Paging genuine customers

The overall goal is to try and finally make money from Azure by targeting major IT consumers.

Last December Microsoft shifted responsibility Azure's development, business and marketing into S&T out from under chief software architect Ray Ozzie. Microsoft put development into the newly created server and cloud division with business and marketing joining Kelly's infrastructure group.

Now, a brace of executives have also shifted to the Windows Azure team to drum up partners and developer adopters. Adam Skewgar and Haris Majeed will "help quickly define the future of the Windows Azure services" while senior director of platform strategy Robert Duffner moves from open source to jump-starting adoption of Azure among ISVs and developers. Duffner's goal will be to translate his experience from working on ISVs and partners on open source to get adoption and build ubiquity for Azure.

Among the tricks at Microsoft's disposal for selling Azure is wrapping it into a Windows volume license – the kind of purchasing agreement bought by tier-one enterprises. This is something Microsoft has already been pushing to gain uptake of Office Web Applications – the browser-based edition of Office that has little real appeal if you've already licensed Office.

Combined with Talisker, there's a clear indication Microsoft will sell Azure under an enterprise-based volume license.

Also, a former Windows Server senior product manager, Scott Ottaway, has been named project manager of Talisker to help accelerate Microsoft's usual product creation process. Ottaway will report to director of product management and planning Mike Schutz. Talisker was also a project name for a previous version of Windows CE.

Microsoft has been making much about adoption of Azure, claiming it's got 10,000 customers. These numbers are suspect, though, and unlikely to reflect real-world adoption.

Typically, Microsoft signs up its most loyal customers and early adopters and brings on people via its customer council. Also, it's unclear what constitutes a "customer" – an organization or an individual – and whether users are actually active.

There's certainly been plenty of the individuals users – those who tested Azure during its trial phase whose accounts could now be active or dormant.

Meanwhile, Talisker comes as research points to the biggest opportunity for cloud being behind the firewall with customers running their own services rather than relying on service provides. IDC found 55 per cent of CIOs prefer private to public, with private clouds accounting for $11.8bn in server revenue by 2014 compared to $718m for public.

By putting Azure into S&T and surrounding it with more S&T marketing and biz-dev people, Microsoft is understood to have moved to protect its existing Windows Sever business from being cannibalized by the cloud as S&T product people will sell Azure along side S&T's other software and services. Kelly's group, meanwhile, has responsibility for business planning including setting prices and licensing of products and services - including Azure.

As a member of Kelly's group, Azure also has to fight Windows Server and Systems Center and Forefront products for valuable marketing budget. ®