Beyond Binary

Microsoft plans to announce next month more of the business details behind its Windows Azure operating system.

The software maker unveiled the cloud-based operating system at a developer conference last year. It has said that some of the services, currently in free testing, will be released in final form this year. The company has said that it will run Azure applications in its data centers and will charge users based on the computing resources they need.

Watson

(Credit: Microsoft)

In an interview on Monday, Corporate Vice President Allison Watson said that the company will get concrete about the financial details and say how partners can help sell Azure at Microsoft's Worldwide Partner Conference which runs July 13-16 in New Orleans.

Until now, Microsoft has said merely that it plans to be "competitive with the marketplace" when it comes to pricing Azure.

Microsoft has also talked about perhaps having partners run Azure data centers in other locations, but Watson said that announcements on that front are probably further out.

"The economics of running a giant hosted business are different," Watson said. "They are interesting."

Microsoft is still trying to figure out exactly which businesses it wants to be in and which should be left to partners, she said. When Microsoft announced Azure, it said that all of the applications would be run from its data centers. However, Watson said the company is also looking at ways that partners can host cloud-based solutions.

"We've had some interesting conversations," Watson said.

Microsoft already competes directly with its hosting partners in other parts of its services business. For example, Microsoft offers online versions of SharePoint and Exchange, but also has partners that host their own copies of those products for customers.

Even in a world where Microsoft is selling services as much as software and using the Internet to deliver many of those products, Watson says that partners remain key to Microsoft's strategy.

"Partners have been our secret ingredient for how we grow and how we get things done," Watson said.

She noted that some of the key growth areas of technology--virtualization, mobility, and unified communications are places where customers need the skills of a partner as opposed to buying a software or service "off the shelf."

Even many of Microsoft's longtime competitors, folks with big internal sales efforts like IBM and Oracle, are starting to place more emphasis on the role of partners, she said. Even Google, she said, is starting to get in the partner game, announcing a program earlier this year.

For Microsoft, it continues to invest in that area despite the economy, Watson said.

While Microsoft has cut some from its internal field sales ranks, Watson said the company has actually added some to its partner sales channel in hopes that third parties might be able to pick up some of the slack on the sales front.

And while the overall enterprise software business is projected to be roughly flat this year, Watson notes that rate is better than on the hardware side. Since last October, Microsoft has been trying to convince partners that selling Microsoft's software can be a bright spot in an otherwise tough economy.

As for the Azure push, Watson didn't want to give away too much more. In the mean time, below is an interview I did with Ray Ozzie when Azure was unveiled. He also spoke about his cloud-based vision in a recent speech at the Churchill Club in Silicon Valley.