Microsoft has nowhere to go but up in cloud market

New study shows competitors have a head start in cloud race

This story was updated to note that Microsoft ranked in three of five cloud categories, not two.

Microsoft may be "all in" on pursuing cloud computing opportunities, but a new study shows the company has its work cut out for it in building a market.

BTC Logic, an IT consulting and research firm, this week released a report, "BTC Ranks: Top 10 Cloud Companies," a commendable effort to assess all the moving parts of the emerging cloud computing industry and help enterprises contemplating cloud computing make some sense of it.

The report takes a systematic approach to analyzing the cloud market, ranking companies not just by sales, but on an evaluation of their products, services and the market segment they are pursuing. BTC Logic, of course, would like nothing better than to use the report to drum up more consulting business. You have to register on the company's Web site to receive the report.

The study divides cloud computing into five segments: Cloud Infrastructure, vendors that offer the hardware and other infrastructure to be a cloud provider; Cloud Foundation, the software and related tools to operate a cloud, primarily virtualization technology; Network Services, which provides the interconnection between all the points of a cloud, including the connection from the client to the cloud provider; Cloud Platform, which covers on-demand services such as the development and deployment of applications that would exist in the cloud; and Cloud Applications, which concerns specific applications that would be accessed in the cloud instead of on-premise, such as HR, CRM or document management -- what's commonly known as software-as-a-service.

BTC Logic cites IDC research forecasting that spending on cloud computing will reach $42 billion by 2012.

Microsoft appears on the top 10 list in three of those segments and its highest ranking in any of them was fifth place. It ranked in seventh place in the Cloud Foundation segment for its Hyper-V virtualization hypervisor. Cloud infrastructure providers likely rely on virtualization to maximize their server capacity for the benefit of their cloud clients. The top company in the platform category, no surprise, VMware, with its vCloud, vSphere and ESXi offerings tailored for cloud environments. Number two is Red Hat with its Enterprise Virtualization, Enterprise Linux and JBoss products.

Microsoft came in last on the list of top 10 Cloud Platform providers for its Azure Services Platform. Azure is the cloud version of its widely used Windows Server operating system for enterprise environments. Microsoft rival IBM ranked second on the platform list with its CloudBurst Appliance. BTC Logic said it ranked IBM at second because of the vendor lock-in issue. "A decision to use CloudBurst forces a company into the IBM ecosystem and precludes working with a number of other vendors," the report states. The number one spot went to Boomi's "AtomSphere," a more vendor neutral integration solution.

Microsoft ranked fifth of the list of top 10 Cloud Application providers with its Business Productivity Online Services suite.'s App-Exchange and Google Apps ranked first and second in that category, respectively.

BTC Logic also ranked other newer, vendor-neutral vendors higher in other categories, such as 3 Leaf Systems, ranked number one in the Cloud Infrastructure category. "[3 Leaf] allows for the greatest agility in developing an entire cloud ecosystem, and the ability to integrate cloud services with other vendors so as to ultimately run platforms and applications cheaply and efficiently," BTC states.

As Microsoft works to build its cloud business, it's going to be up against those hungry upstarts as well as industry powerhouses like IBM. And it certainly doesn't become king of the cloud by default, as IDC analyst Frank Gens noted at a cloud conference in Santa Clara, Calif., in March when he asked "Who's going to be the Microsoft of the cloud?"

Microsoft has outlined its five principles of cloud computing presented by CEO Steve Ballmer in March that, while not necessarily unique, at least provide some focus to the company's efforts.

The second quarter BTC report is due out in mid-July. It'll be interesting to see if Microsoft improves its rankings in this growing market.

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Copyright © 2010 IDG Communications, Inc.