Microsoft Puts Stake in the Ground Versus Cloud Competitors

REDMOND, Wash. — Aug. 29, 2011 — Corporate vice presidents Brad Anderson and Michael Park, from the Management and Security Division and Business Solutions Division, respectively, talk to Microsoft News Center about Microsoft’s cloud computing strategy and the new ads and incentives they are rolling out this week. With adoption of and interest in cloud computing on the rise — the global market is expected to grow from $40.7 billion in 2011 to more than $241 billion by 2020* — Anderson and Park see this as a great time to showcase the value of Microsoft’s cloud offerings versus those from competitors VMware and Salesforce.com.



Microsoft’s private cloud customers pay per processor and can grow without adding new processor costs over time. VMware’s Cloud Infrastructure Suite customers pay to add virtual machines or memory. Microsoft customers can see from four times to 10 times the savings over a period of one to three years.

MNC: Can we start by getting a more specific look, from both of you, at what Microsoft is doing this week, and why these new programs are rolling out now?

Anderson: One of the biggest challenges facing our business customers today is confusion around where to place their cloud computing bets. The industry is at an inflection point, and customers are critically evaluating their approach to cloud computing. We believe now is the time to provide the information businesses need to make informed decisions about where to invest — and with whom. That’s why we’re rolling out a new offer and information to help customers understand our private cloud solutions versus VMware.

Park: Building on what Brad said, we also see a lot of hype in the market that is creating confusion for customers — that’s true in the CRM space as well. We also realize there are some hard costs associated for customers that decide to move vendors. As customers are evaluating their options, we want to make it easier for them to make a move should they choose to do so. So we are offering Oracle, Salesforce.com or SAP customers $150 per user that can be used for services such as migration of data if they switch to Microsoft Dynamics CRM. This offer is valid for up to 500 users per company.

MNC: Let’s go a little deeper with you, Brad, and talk about the private cloud landscape. I’ve heard Microsoft talk about the “post-virtualization era”; what does that mean?



Brad Anderson, corporate vice president, Management and Security Division, Microsoft.

Anderson: Let’s be clear: Virtualization is not cloud computing. It is a step on the journey, but it is not the destination. We are entering a post-virtualization era that builds on the investments our customers have been making and are continuing to make. This new era of cloud computing brings new benefits — like the agility to quickly deploy solutions without having to worry about hardware, economics of scale that drive down total cost of ownership, and the ability to focus on applications that drive business value — instead of the underlying technology. I talk more about the ability to focus on applications that drive business value in my recent blog post.

MNC: So when it comes to cloud computing, how does Microsoft’s strategy get customers on a better long-term path and what are the benefits?

Anderson: With Microsoft, customers get a comprehensive approach to cloud — that’s our strategy — because customers have told us they want to get to cloud on their terms. So we are focused on giving customers the ability to deliver applications and create business value — in the public cloud, the private cloud, as software-as-a-service or a combination of all of these — and that’s why we have real offerings available, today, in all those areas. This is pretty different from VMware’s approach — as a virtualization company, its strategy is virtualization-centric and focused on the deployment and consolidation of virtual boxes.

That difference in approach continues with how we pass on the economic benefits of cloud to our customers. Microsoft’s business has been built on democratizing technology, making it easy to use and offering it at an affordable price — and we are doing that with cloud. With private cloud solutions, in particular, we have studies illustrating that customers could pay roughly four times to nearly 10 times more for a VMware private cloud solution.

Figure 1 shows the cost difference between a Microsoft and a VMware private cloud scenario.

MNC: You mentioned a VMware private cloud solution is roughly four times to nearly 10 times more expensive than a Microsoft private cloud solution. Can you expand on that?

Anderson: Sure, it’s driven predominantly by the fact that we see virtualization as a step, not an end destination. VMware’s approach is focused on virtualization, and you see that show up in its business model. For instance, VMware’s private cloud solution, Cloud Infrastructure Suite, appears to be priced by adding either virtual machines or memory to run mission-critical applications, charging you more as you grow. Our private cloud solutions are licensed on a per-processor basis, which means customers get the cloud computing benefits of scale with unlimited virtualization and lower costs consistently and predictably over time. With Microsoft, as your workload density increases, so does your ROI. With VMware, as your workload density increases, so do your costs, which is kind of counter to the promise of the cloud. This approach to pricing is just another proof point to me that VMware is really just a virtualization company trying to talk cloud, as showcased in some of our outreach. Customers can also learn more about our private cloud ROI research and solutions.

MNC: Michael, in the CRM space, what problems are you solving for?



Michael Park, corporate vice president, Microsoft Business Solutions Sales, Marketing and Operations, Microsoft.

Park: As the cloud goes mainstream, companies will look to consume and deliver IT as a service by evaluating their entire portfolio of applications, platforms and infrastructure to determine which applications and workloads should completely move to the cloud; augment local resources either via private of public cloud extensions; or build transformative applications that vastly increase computing power available to any server, PC or device. CRM is one of the first areas to shift to the cloud. With cloud computing, business decision-makers often look at the cloud through the lens of a single application. In particular, CRM, given its horizontal nature, rapid time to deployment and ease of configuration for sales administrators, fits the bill perfectly.

MNC: Microsoft has been taking some stabs at Salesforce.com with the “Don’t Get Forced” campaign. What differentiates Microsoft Dynamics CRM Online from Salesforce.com?

Park: Our customers choose Microsoft Dynamics CRM for the simplicity, agility and overall value it delivers. Microsoft is the only vendor that gives customers a choice in how they deploy the software, with a fully functional public, private and hybrid cloud offering. Salesforce.com customers that want private cloud solutions to meet technical, regulatory or business policy requirements are simply out of luck. A successful CRM system is one that is actually used by salespeople. Microsoft Dynamics CRM seamlessly interoperates with Outlook, Office, SharePoint and Lync, as well as cloud services such as Windows Azure and Office 365, providing a familiar experience to users and maximizing the value businesses get from their existing IT investments.

MNC: You mentioned that Microsoft Dynamics CRM offers a better overall value for customers; can you expand on that point?

Park: Microsoft Dynamics CRM also offers customers a strong ROI. A recent Microsoft-commissioned study by Forrester, “The Total Economic Impact of Microsoft Dynamics CRM 2011,” found that a 2,000-employee composite organization with an initial deployment of 50 users would experience a three-year, risk-adjusted ROI of 243 percent over a payback period of 4.1 months, as well as streamlined processes and operations leading to lower cost of sales, marketing cost savings and productivity savings.

MNC: Is there anything additional you want customers to know?

Park: What we want to get across is that, fundamentally, our strategy and approach is quite differentiated from others in the market. Microsoft’s strategy looks broadly across the infrastructure, platform and application layers of the cloud because we know that’s how our customers will run their businesses. And we have solutions available today in all of these areas — from Windows Server and System Center to Windows Azure to Office 365 and Microsoft Dynamics CRM Online. Our solutions are built for the future. This will enable our customers to build a cloud on their terms that will deliver improved agility and responsiveness, increased business alignment, and higher ROI for the long term.

*“Sizing the Cloud,” by Stefan Ried and Holger Kisker, Forrester Research Inc., 21 April 2011, pg. 4.