Microsoft goes all-in on hybrid cloud with Azure-in-a-box

CEO Satya Nadella says Microsoft is in cloud computing game for the long haul

Microsoft Monday doubled down on hybrid clouds by unveiling an on-premises system that syncs up with Azure public cloud services.

With its new Cloud Platform System (CPS), Microsoft is attempting to differentiate itself vs. rivals Amazon Web Services and Google.

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This Azure cloud-in-a-box offering, available next month, uses the same software that powers Microsoft’s Azure public cloud - the HyperV hypervisor, Windows Systems Center and Azure Pack - and runs on hardware supplied by Dell. Microsoft launched the appliance during a media event in San Francisco with CEO Satya Nadella and Scott Guthrie, the company’s executive vice president for its cloud and enterprise group. The company did not say how much CPS will cost.

AWS, which has been named the leader of the Infrastructure-as-a-service (IaaS) public cloud market year-after-year by research firm Gartner in its annual Magic Quadrant report, does not have an on-premises appliance. Rather, AWS offers services that allow customers to securely connect to Amazon’s cloud. Other vendors like VMware, HP and Rackspace give customers software to run private clouds with similar management tools as their corresponding public clouds, but Guthrie says Microsoft believes that only itself, AWS and Google have true hyperscale public clouds.

Many customers are not ready to migrate all of their operations to the public cloud, Microsoft Azure CTO Mark Russinovich said after the event. They may have legacy infrastructure or they may have sensitive information they want to keep on their own premises. “They can’t just shut it down and move all to the public cloud,” he says. CPS allows users to continue to operate their on-premises cloud with the same management tools as the Azure public cloud.

Mark Bowker, an analyst at Enterprise Strategy Group, says Microsoft offering CPS as an on-premises component to the hybrid cloud is a big deal for organizations that want a consistent management platform between their shops and the public cloud. “Microsoft is guiding IT on how to run the most efficient operation by leveraging some aspects of the Azure public cloud while still operating some workloads on a private cloud,” Bowker says. It’s a message he believes will resonate not only with enterprise end users but with service providers who could expand their offerings beyond just Office 365 SaaS apps and now offer Azure-like IaaS offerings, too.

Bowker is interested to see how Amazon and Google respond. Amazon has scoffed at private clouds, but has more recently spoken about hybrid cloud connectivity. Google, meanwhile has focused most of its efforts on its public cloud. Both companies have major conferences in the coming month, with Google Platform live in early November and Amazon re:Invent in mid-November. 


satya nadella

CEO Satya Nadella says Microsoft is investing $4.5 billion in capital expenditures to build up its cloud annually.

CEO Nadella said Microsoft is in the cloud computing game for the long haul. The company’s cloud division -- which includes cloud-hosted SaaS applications Office 365 and Microsoft Dynamics, plus the Azure IaaS -- has an annual revenue run rate of $4.4 billion and . Nadella claims that 80% of Fortune 500 businesses use Microsoft’s cloud in some way and that the company is investing $4.5 billion in capital expenditures to build up its cloud annually.

In the past year, Microsoft has added 300 features to its cloud. On Monday, two more were announced: An extra-large virtual machine instance size and a new premium storage offering.

The G family of virtual machines come with twice the memory of AWS’s largest current virtual machines and four times more than Google Compute Engine’s largest VMs. The Premium Storage VMs offer 32 TBs of storage per machine with 50,000 IOPS (input/outputs per second). The new services are aimed at attracting large-scale workloads, such as enterprise-class databases and high-performance applications.

Microsoft also, as expected, launched a new marketplace of partners and services that run on top of Azure. The company highlighted partner Cloudera, which offers a Hadoop big data processing tool on top of Azure, as an example.

Microsoft also announced support for its fifth version of Linux on Azure with the introduction of CoreOS virtual machines. During the event, Nadella said: “Microsoft loves Linux,” as part of his emphasis that Microsoft wants its cloud to be a platform for all types of workloads, not just those from Microsoft.

Microsoft rattled of a slew of enterprise customers using Azure, from GE Healthcare to AccuWeather, NBC and Heineken. More details on Microsoft’s strategy can be found in its blog here.

Microsoft is also building up the capacity of its public cloud. By the end of the year the company will have 19 regions for its IaaS, including two new ones in Australia. Each of those regions has up to up to 600,000 servers across 16 data centers.

Copyright © 2014 IDG Communications, Inc.

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