Michael Park and Mike Schutz: Cloud OS Announcement

JOEL SIDER: Hi, everybody. Thanks for joining us. I’m Joel Sider. I’m a public relations manager here in Server & Tools. We’re going to go ahead and get started.

We’re here today to talk to you about several new Microsoft products and services, all of which demonstrate progress against Microsoft’s Cloud OS vision.

Corporate vice president of Server & Tools Marketing Michael Park is going to lead off with a brief overview of the Cloud OS, and then our general manager Mike Schutz here in Server & Tools will talk through the new offerings and how they fit into the Cloud OS story for customers and partners.

And we’re very fortunate to have with us Alan Bourassa, CIO of EmpireCLS, and Jess Coburn, CEO of hosting service provider Applied Innovations. You’ll hear from them about how they’re using Microsoft technologies in their businesses.

There will be an opportunity for Q&A, for question and answer, with the Lync messaging functionality at the end of the call.

Our press release, Michael’s blog post, and links to additional resources are all available on Microsoft.com/newscenter.

We do ask that you keep your phone muted until the end.

So I think with that, we can get started with Michael Park.

MICHAEL PARK: Thanks, Joel.

Good morning, everyone. I want to thank you again for joining us for this announcement today.

You likely have heard us talk about the Cloud OS over the past few months behind the Windows Server 2012 launch that we did in September, and I think it’s useful that we set the stage today to clarify and define what we’re seeking to accomplish with our strategy for commercial IT as a whole.

At Microsoft we’ve built a very successful franchise on the concept of an OS. At its core, an operating system manages hardware drivers and provides an application platform for PCs, and we’ve been very successful in that domain in the past.

We think that the OS will play a much more important role in the era of the cloud, moving beyond PCs to an OS that can manage the underlying infrastructure and application platform across public clouds, private clouds, and hosting service provider clouds.

Our vision is to create and provide customers with one consistent platform for infrastructure, applications and data, spanning customer datacenters, hosting service provider datacenters and the Microsoft public cloud.

And the Cloud OS is what drives our product strategy and road map to help our customers embrace the transformational trends in IT that we’re all familiar with, such as various cloud computing models, the consumerization of IT, the new generation of connected applications and big data.

So, more specifically, what does Cloud OS mean for IT organizations? IT organizations are going to be able to deliver and manage powerful modern applications that can help IT meet the demands of business in terms of speed, cost-effectiveness and flexibility of these applications.

They’ll be able to give employees personalized experiences with apps and data on virtually any device by tackling the consumerization of IT and bring your own devices with what we call people-centric IT.

Further, it means that IT will manage data, both structured and unstructured, in a way that can help end users unlock insights with greater ease and end-user adoption than ever before.

It also means that IT can shift to more efficiently managing their datacenter resources across not just the servers but across networking, storage and compute, all as a singular resource pool instead of the quagmire of complexity that many of them live in today.

And furthermore, this extends beyond just the private cloud, their own datacenter resources, but out to the partner and the public clouds with a modern hybrid IT infrastructure.

So Microsoft’s approach to this Cloud OS is unique, and it starts with our core platforms, Windows Server and Windows Azure, working together as a consistent platform across the three datacenters we’ve been talking about, with a consistent set of capabilities designed to make it easier for IT and developers to do their jobs.

You know, specifically, we’re talking about differentiation in five key areas. One is to deliver flexible application development tools and languages, not just .NET but also open source in this world of heterogeneous application development.

Second is a single user identity across clouds through Active Directory and Windows Azure Active Directory.

Third is our unified management with System Center for a single control plane to manage IT resources across private, hosted and public clouds.

The fourth area is integrated virtualization built into Windows Server to virtualize not just the servers but also the network, storage and applications with portability across the different clouds.

And last but not least, a data platform powered by SQL to power mission-critical business applications and give end users BI solutions with a wide range of tools ranging from Excel all the way out through Hadoop.

These consistent five capabilities are what make the Microsoft approach to the Cloud OS unique.

Our knowledge is deeply informed by two vantage points. No. 1 is that we’ve got firsthand knowledge running over 200 cloud services for a billion plus customers and over 20 million businesses around the world from our own datacenters around the world. And second, we’ve also learned a lot from our customers by running more than 75 percent of the world’s servers on-premises that support commercial IT infrastructure today.

We take all the learning from these services and servers into how we think about delivering the Cloud OS — Windows Server and Windows Azure and beyond to SQL Server, System Center and Visual Studio, all of which customers and partners can then use to deliver cloud infrastructure and services of their own.

For example, Windows Server 2012 delivers capabilities taken from our public cloud datacenters, things like cluster-aware updates for lower downtime, the use of industry standard storage for resilient failover and support for multitenant, high-density websites. It’s pretty cool stuff, and it’s stuff that we’re learning as we do in sharing that learning in the products we develop.

It’s a virtuous cycle of development and an important reason why customers can really bet on Microsoft in the cloud era. Our breadth of experience across private, public and hybrid cloud is unmatched, whereas other vendors are tending to specialize in one or another area.

JOEL SIDER: Thanks, Michael.

So with that, we’d like to go ahead and bring in Mike Schutz into the conversation. As I said, Mike is a general manager here in Server & Tools for product marketing. He’s going to talk about the new products and services and how they fit into the Cloud OS, including customer datacenters, the role hosting service providers play and also managing the consumerization of IT.

MIKE SCHUTZ: Thanks, Joel.

Welcome, everybody, and thank you for joining us.

Michael talked about one of the core tenets of the Cloud OS, which is helping customers on their own path to transform their datacenters.

By that we mean shifting from managing individual servers with CPUs, disk drives and network adapters to really managing and deploying their datacenter resources as a whole. It’s about managing storage, network and compute holistically as a singular cloud infrastructure, and even extending their datacenters to hosted and public clouds, all with the scale and availability that they need to build and deploy applications to respond to the needs of their unique businesses.

As you know, we delivered Windows Server 2012 and released it last September. Windows Server 2012 represents the foundation of these capabilities, delivering hundreds of new advancements and enhancements in virtualization, in storage, in networking, as well as automation.

Windows Server 2012, as Michael pointed out, is a prime example of how we’re bringing our public cloud lessons and investments to our products that our customers and partners deploy in their own datacenters.

Some examples of that are things that we learned around deploying multitenant services in our public cloud and to deliver network virtualization, which represents the foundation for software defined networking, updating a cluster of servers of up to 64 hosts and 8,000 virtual machines without having any service downtime, and so doing that with cluster level updating, as well as leveraging innovations and storage to deliver high-scale resilient storage to power the cloud infrastructure on industry standard hardware.

The customer response and industry response to Windows Server 2012 has just been incredible. For example, a recent Enterprise Strategy Group survey found that 90 percent, nine out of 10 customers, plan to deploy Windows Server 2012 in the next two years. We’re really excited by the response we’re hearing from our customers and partners around Windows Server 2012.

And now we’re announcing the release of System Center 2012 SP1, service pack one. This is an update to System Center 2012 that brings the full range of System Center management capabilities that our customers have grown to know and love to Windows Server 2012 for private and hybrid clouds.

Things like multitenancy, storage virtualization, network virtualization, which provides the foundation for software-defined networking, and all of the great capabilities that Windows Server delivers are now brought to bear with System Center 2012 SP1, including the support for non-Windows operating systems and multi-hypervisor environments, so customers can leverage their existing infrastructure investments and still take advantage of all of the new capabilities that have been delivered.

System Center is a true hybrid cloud management solution. It provides a single tool to manage cloud-based applications and resources, whether they’re running in our customers’ datacenter, a hosted service provider’s datacenter or in a Microsoft datacenter with Windows Azure.

Customers can use System Center to move virtual machines to Windows Azure and manage them within the System Center console that they use today.

They can also use System Center 2012 SP1 to backup servers to Windows Azure in a hybrid environment to protect against data loss and corruption.

Additionally, System Center 2012 SP1 includes support for a new Windows Azure-based service that we’re announcing today called Global Service Monitor or GSM. GSM is a companion service, if you will, to System Center 2012 SP1 that helps customers monitor and boost the performance of Web applications.

GSM extends the application monitoring capabilities that are already in System Center 2012 SP1 with the Operations Manager component, and it uses Windows Azure locations around the globe to give customers a real true reflection of the end-user experience that users will have with the Web applications.

GSM is now available for trial, and we’ll make that more broadly available in March.

JOEL SIDER: Thanks, Mike. So at this point, we’re going to bring in Alan Bourassa. He’s the CIO of EmpireCLS. He’s going to tell us a little bit about how he’s using Microsoft technologies, particularly Windows Server 2012 and System Center 2012 SP1, to really transform his company’s IT operations and the business overall. Welcome, Alan.

ALAN BOURASSA: Thank you. Thanks and good morning, everyone.

I’m Alan Bourassa, the CIO of EmpireCLS, and we are the second largest ground transport —

JOEL SIDER: Alan, I think we may have lost you for a minute. Are you there?


JOEL SIDER: Yes. I think we can hear you now, Alan. Go ahead.

ALAN BOURASSA: OK. I don’t know where I left off.

We’re the second largest ground transportation company in the world, and we operate in more than 650 cities worldwide. And we maintain three world-class datacenters worldwide. We actually just finished up doing the Golden Globes this past weekend.

Over the last several years, we have been transforming our business from just a luxury ground transportation company to a world-class hosting provider, targeting and specializing specifically in the ground transportation industry segment.

We now offer software as a service for our proprietary dispatch and reservation systems that we build and infrastructure as a service to those companies specializing in the ground transportation industry.

We took an existing software asset from our company and developed it and used it in a business model with our intellectual property and capital to make a public cloud offering and to build on that model for our cloud services to maximize our original software investment.

Today, more than 90 percent of our workloads are virtualized, and either run on our private, public cloud offering or on the Microsoft Azure platform.

We have also virtualized our entire mobile workforce and internal desktops are all provisioned and operate with cloud services.

With this, we’ve reduced our desktop problem resolution case by more than 75 percent; we’ve reduced our carbon footprint by more than 50 percent; we actually provide a carbon footprint to all of our customers to be as green as possible, which also helps us reduce our electrical costs and operating costs.

Empire has consolidated its datacenter footprint by more than 50 percent through HP server offerings, combined with Microsoft’s strong virtualized performance improvements and coupled with the announcement today of System Center 2012 SP1 management platform in this release today.

So how has Empire been able to do this while maintaining and lowering our costs?

The answer for us was clearly System Center 2012 and Windows Server 2012, and probably to use an overrated term, you know, the story is better together. We have been a Microsoft customer for the last several years, and before that we were a total UNIX shop. And now with the release today of System Center 2012 SP1, coupled with Windows Server 2012 features and functionality, we have now been able to transform our company from just a luxury ground transportation company to a world-class public cloud hosting provider.

We actually expect over the next several years that more than 50 percent of our total revenue is going to come from this new business transformation and venture.

Without Microsoft’s total cloud vision and solution, we’d never have been able to have accomplished this. This has allowed us to expand our business model and to becoming a public hosting provider in the cloud while maintaining and controlling our costs with the use, you know, again of the System Center 2012 SP1 suite of products. And there are many in this suite, and I’ll mention a few that have actually had a major impact on our business in relation to resiliency and our cloud offerings that have allowed us to expand our business and increase and maximize our revenues significantly.

So some of those examples are we’re using in the suite Virtual Machine Manager, which is the Hypervisor 3 environment, to basically manage for us hundreds of hypervisor workloads through one pane of glass. You know, the saying now in our company is we don’t build servers anymore; we build hypervisors and we build private and public clouds. This translates into many hypervisors and many clouds seen as one. It’s all about simplicity of management. All of this is seen as one view into many hypervisors and workloads. This keeps our cost down, but we’ve actually been able to add more than 550 transportation vendors over the last year to this platform, again without increasing costs.

We’re also using Data Protection Manager for all of our backup and recovery protection in this suite in both our private and public cloud and using Windows Azure backup services to augment and protect our data in the public Microsoft cloud offering.

And we’re using System Center Operations Manager to alert us to any issues in our private, public and Microsoft Azure cloud platform services before the users or customers see any changes even in the environment. This has allowed us to maintain an uptime of seven 9s, which until now has been unheard of in the industry.

We’re using System Center Service Manager for our user community and customers to submit tickets for new services, which then get provisioned automatically through System Center Orchestrator to reporting issues about services they need to help.

So clearly it’s a whole suite of products, and I’ve only touched on a few. You know, with Microsoft’s Hypervisor 3 and Windows Server 2012, we’ve moved even our communication platform of traditional PBX systems to Lync 2013 that now handles our voice, video and IM communications all 100 percent virtualized and in the cloud. We really only dreamed of doing this before; now it’s a reality.

And with Microsoft System Center 2012 and Windows Server 2012 we’re also virtualizing workloads like SQL Server 2012 in a cloud virtualized environment. I personally would have never dreamed of virtualizing this type of workload before either. In fact, I was a staunch opponent for a long time of a SQL workload being virtualized. That dream has now come true with the new releases that you’re hearing about today, and the release recently of Windows Server 2012.

Now, as evidence to support this, we now have more than 550 customers and vendors on our combined private, public and Microsoft Azure cloud services offering, and it’s generating additional revenues for our company that were not possible before.

Microsoft has been able to make the cloud environment more robust while making the management of these complex environments simpler for the IT staff members to manage.

So you might ask at this point, you know, why did EmpireCLS pick Microsoft? We, of course, in our evaluation of platforms looked at many vendors. One that you will always compare against typically when you’re talking about hypervisors is VMware. But in the final analysis though, VMware was a hypervisor virtualization play only and didn’t have the depth and breadth of a total solution for cloud services end-to-end that all companies need. Microsoft from my point of view is clearly the innovator and thought leader in the total cloud sol, and clearly the thought leader and visionary for businesses that want and need total cloud services solutions.

Now, examples of this are that we are seamlessly moving virtualized workloads between our private, our public and Microsoft Azure cloud services offerings seamlessly. It’s simple and it’s through one pane of glass. It can’t get simpler than that.

Of course, the discussion would not be complete also without mentioning some of the features that are enabling us or being enablers to be more competitive and help us transform our business model into a hosting provider offering. So I’ll get a little technical. We’re using some of the new features like software-defined networking that’s been unheard of in the industry, and we’re starting to embrace that, extensible network software switches, hypervisor replicas to maintain uptime and availability across datacenters, live storage and live virtual machine migration on shared nothing — unheard of, virtual fiber switches, scale-out file servers, and software network isolation for our tenants, just to mention a few of the hundreds of new features and functionalities introduced today.

So for us, for EmpireCLS, so all in all, Microsoft is and will continue in our view to be the thought leader and visionary in the complete cloud services offering space, and EmpireCLS actually bet on Microsoft cloud technology end-to-end several years ago, and it was the best bet we ever made. We couldn’t be happier being a customer, and more so treated by them as a partner in helping us to grow actually our business through their complete and strong cloud services offering, and the primary thought leader and visionary for the cloud transformation that is going to continue to revolutionize and commoditize the cloud services industry.

I want to thank Microsoft and thank everyone for listening today. Thank you.

JOEL SIDER: Thanks so much, Alan.

So we’re going to take it back to Mike Schutz now. He’s going to talk about hosting service providers in the Cloud OS, building on what Alan talked about, and we have some news in that area as well.

MIKE SCHUTZ: Thanks, Joel.

It really is inspiring to be able to work with customers like Alan and EmpireCLS, and watch how some of the technologies and products that we work on can play some small part in the business transformation.

So speaking of business transformation, we’re seeing a huge shift to cloud computing, as well as how hosting service providers play a really key role in that.

And as I mentioned earlier, Windows Server 2012 and System Center 2012 enable hybrid IT across private, hosted, as well as public cloud.

Hosted service providers are a really key role in our Cloud OS strategy and help customers transform their datacenters. So, in that vein, they’re a really important third cloud that Michael outlined earlier with respect to Cloud OS.

We already have an enormous ecosystem of hosting service providers that can participate in the Cloud OS. Over 14,000 use Windows Server today, over 8,500 use SQL Server, and over 5,500 use Exchange, and the list goes on.

So, for example, System Center 2012 SP1 delivers an API that we call Service Provider Foundation that hosting providers can use that helps integrate with a customer’s on-premises datacenter solution and connects their service portals with customer management console. This is a great capability for enterprise customers because it gives them the datacenter elasticity where they can integrate a service provider’s cloud capacity and management directly into their datacenter operations. This provides them more infrastructure scale.

It’s also great for hosting service providers because of what they can offer to clients and how they can grow their businesses by acting as a seamless extension to a customer’s datacenter.

So, with our solution, the story gets even better for hosting partners today with what we call Windows Azure Services on Windows Server. We initially previewed these capabilities last summer in Toronto, Canada, at the Worldwide Partner Conference, and now they’re generally available.

These are high-scale websites and virtual machine hosting capabilities that we originally built for Windows Azure, and we’re now taking those and making them available to our hosting service providers to run on their own Windows Server 2012 and System Center infrastructure.

These are specifically designed for easy incorporation into a service provider’s existing services so that they can use them to differentiate their offerings and customize them without a lot of heavy lifting.

The Windows Azure services on Windows Server are a great example of the virtuous cycle of development that Michael spoke about earlier where we bring our learnings and investments in the public cloud and apply them to our products for customers and partners to deploy in their own datacenters and fulfill part of that three cloud vision that the Cloud OS is based on.

We’re really excited about the opportunities that we have together with our hosting service providers, and the announcements today provide a big step forward in that model.

JOEL SIDER: Great. Yeah, again that was Mike Schutz, general manager here in Server & Tools at Microsoft.

With that, let’s bring Jess in from Applied Innovations. Jess, tell us about Applied Innovations. Tell us how you’re using Windows Server and System Center and the new technologies that Mike talked about.

Jess, have we got you there?

Bear with us.

JESS COBURN: I guess had myself muted. I apologize for that.

JOEL SIDER: Hey, no worries, appreciate it.

JESS COBURN: I am a technologist, believe it or not.

So Applied Innovations is a 14-year old Web hosting company based down here in Boca Raton, Florida. Traditionally, we’ve catered to developers, designers and agencies, and predominantly within the U.S. Today, we power more than 35,000 domains for 10,000 customers, and we operate over 2,500 server instances with 90 percent of that running on top of Hyper-V.

Back in 2009, we were one of the first hosts globally to launch Hyper-V and System Center, and at that time we really opted for Hyper-V because of the economics.

Back in 2009, there were really only two choices for us. So it was Hyper-V or it was VMware. And when looking at the two we looked at Hyper-V, and we went in that direction because, one, it was the overall cost, but more important than that was the fact that we could take our Windows Server admins, leverage their experience and expertise, and deliver this new offering with little pain to ourselves. And so that’s the direction we went.

Now, fast forward to today, and it’s four years later, and we’re still deployed on top of Hyper-V.

And there’s a wealth of different solutions out there for us from open source solutions like OpenStack all the way up to our friends at VMware, and we’re still focused on Hyper-V. And the reason for that is really that it’s this notion of one consistent platform and a Cloud OS, and that’s what’s kept us there, and we’re really excited to see that come forward.

So with System Center 2012 SP1 and the new technology there it’s really going to help our business. You know, the cloud is redefining our business and our industry. And when in the past we saw that we were deploying these Web workloads, and that’s been a major focus of our business, now that we’ve started deploying cloud we’re starting to see what our customers host transition from Web to more of enterprise-type workloads.

Last year, we acquired another company, and that company focused exclusively on building a channel business of partners that delivered managed services to small and medium businesses. And they’re one of those businesses that deployed these enterprise IT workloads that were traditionally on-prem.

In the last three months, we’ve seen that business grow by 25 percent, and I believe by delivering more services that are exposed in Hyper-V and System Center we’ll be able to grow that further.

So SP1 brings some of these new services to us, right? There’s the ability to leverage Hyper-V Replica and offer disaster recovery services. There’s network virtualization and allowing these customers to move workloads to and from the cloud seamlessly. And then there’s the service provider foundation in SP1 that allows our customers to manage all their services directly within System Center.

Now they’ll be able to leverage the same System Center tools they use today on-prem to manage their on-prem infrastructure and also manage their cloud hosted with us or with Azure from that one pane of glass. So, in one pane of glass, they’ll be able to manage all their infrastructure, and for our managed Web business that’s really key.

But there’s also our shared hosting business, and over the last 14 years shared hosting really hasn’t changed much. But when Microsoft announced Windows Azure services for Windows Server, that’s really a big change in shared hosting. You know, Microsoft’s taken a lot of their learnings from Azure and making it available to their partners. And because of this new service, we’ll be able to stand up an elastically scalable cloud hosting environment that will allow our shared hosting customers to get that same benefit of the cloud that previously was only available to our managed cloud customers, and for us that’s really exciting.

So I think it’s pretty safe to say that the cloud has really changed our industry and changed our business, and by Microsoft taking the approach that this isn’t just an OS but a Cloud OS and this one consistent platform, they’re really changing it in a way that we’re able to leverage it and build successful solutions to our partners and our customers in a way that’s easy to understand and easy to deploy, and at the end of the day everybody wins.

JOEL SIDER: Jess, thanks so much.

So we’re going to go back to Mike now to cover the kind of last part of the news and story today.

MIKE SCHUTZ: Thanks, Joel.

And again, as the last part of the announcement, we really want to focus on some of the trends that Michael Park mentioned earlier around the undeniable number of connected devices, the consumerization of IT and the bring-your-own-device trends that we’re seeing in the market.

We all know this is a huge shift for IT organizations and brings with it a whole host of new challenges as end users bring new types of devices into the workplace and would like to work from those devices.

A core part of our Cloud OS vision is to help IT do what we talk about as a people-centric approach to these trends. What this means is we’d like to put the user first by delivering personalized experiences that give employees the productivity they need and have come to expect on the devices that they choose.

System Center 2012 SP1 plays a key role here of providing consistent management of not just the datacenter resources that I talked about previously but also PCs and devices that are used by employees across the company.

System Center 2012 SP1 and the new Windows Intune cloud-based service that’s now available provide a unified PC and mobile device management solution. It’s a comprehensive approach that lets IT use one management solution to provide users with access to corporate resources on the devices that they choose, and therefore represents a win for both users as well as IT. This solution provides management and software distribution with enterprise scale of up to 100,000 devices.

Windows Intune is now offered in 87 countries around the world, representing the majority of the world’s population.

This combination of Windows Intune and System Center is really ideal for helping IT secure and manage the new generation of powerful Windows 8 PCs, Windows RT tablets, Windows Phone 8 smartphones, as well as all the diverse other platforms in today’s modern enterprise, including Android and iOS. So this is a really exciting announcement for us to help bring together the management of PCs and devices to help IT and end users at the same time.

JOEL SIDER: Great. Thanks again, Mike.

So that really brings an end to the overview of the presentation and news. We’ll open it up for Q&A. If you do have questions, you’re welcome to communicate that through the instant messaging functionality on Lync.

As I mentioned at the top of the call, there is a press release, along with a blog post by Michael Park about the Cloud OS, and links to a whole set of other information. All that is on Microsoft.com/newscenter. You can also email questions to our PR team at [email protected].

So we’re getting a question from Timothy Prigget-Morgan (ph) asking about the release notes for System Center SP1, as well as Windows Azure services for Windows Server.

The best place to start is Microsoft.com/systemcenter, which will take you to the more detailed documentation if you’re interested in that.

There’s also a more detailed blog post on what’s called the server cloud blog. If you go to the News Center site, you’ll find links to all of this.

Well, good. So I think we’ll go ahead and wrap up. Again, please let us know your questions, take a look at the information up on News Center, and with that we’ll go ahead and close today’s call. Really appreciate everyone tuning in.


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