While every rule has an exception, mobile in this case, Microsoft's history with PC UIs, the Internet, search, Apple software and most recently the cloud show that it's seldom first to market, but capable of stunning turnarounds once it acknowledges and confronts an existential threat.
Microsoft's current obsession is the cloud and concomitant new infrastructure delivery and software development models that both threaten its traditional packaged software business and open opportunities to dominate the still-nascent era of SaaS subscriptions, rental infrastructure and retooled, omni-virtualized, service-oriented data centers. Azure is Microsoft's answer to AWS for public cloud services, but with just-released Azure Stack, it's bringing the same capabilities to internal IT.
Azure and Azure Stack demonstrate Microsoft's commitment to hybrid public/private clouds and together mark the most significant differentiator to its biggest cloud competitor, AWS.
Like VMware with vCloud/vCloud Air, Microsoft aims for complete compatibility between private and public Azure instances. Unlike vCloud, Azure includes a growing list of application-level PaaS services and, more importantly, enough current and potential customers from its huge Windows Server installed base to pose a realistic threat to Amazon's dominance.
Most estimates put Azure as a strong number two in the IaaS market with between 30% and 60% of AWS' market share, albeit with a faster growth rate. According to Microsoft's figures -- taken with an appropriate amount of skepticism, but which sound plausible -- 80% of the Fortune 500 use Azure in some capacity, the service adds over 90,000 subscriptions per month and currently hosts over 1.4 million SQL databases. At the company's October FY16 Q1 earnings report (Q2 will be released on 1/28), Microsoft said Azure revenues doubled year over year, which is a rate twice that of AWS.
Microsoft's growth strategy is an all-in bet on hybrid cloud, which it sees addressing business concerns like infrastructure, application and transaction latency, data sovereignty and control regulations and needs for customized infrastructure that can't be met in a public, shared-services environment.
Its solution, dubbed Azure Stack, brings Azure inside the enterprise. Azure Stack provides full private-public cloud compatibility for developers and ISVs (common APIs and automation tools), business analysts (consistent design patterns and service elements) and IT (the same management console, admin constructs and access controls). This is possible because Azure Stack uses the same code base as public Azure: the internal differences primarily occur at the hardware level to account for the idiosyncrasies of Azure's much larger scale and occasional use of one-off, non-commercial hardware.
Although we've heard hybrid cloud stories before, at a private briefing with a small group of analysts and journalists, I was struck by the comprehensive nature of Microsoft's Azure vision which is to run a complete Azure PaaS in a private data center. An important customer segment for Azure Pack isn't enterprises at all, but service providers that customize a base Azure cloud for specific industries and application categories or provide hosting in underserved parts of the world where Microsoft doesnât have a regional presence.
The tight public-private integration was driven home during hands-on labs using the existing Azure management portal and where Azure Stack running on a local (very powerful) workstation looked like just another cloud region when it came time to deploy services. Everything, whether JSON service templates on Github or PowerShell automation scripts, worked the same regardless of the target Azure infrastructure.
Still Work in Progress
Although eminently useable, Azure Stack is far from production worthy: this week's announcement is just the first Proof of Concept (PoC) preview release that contains a small subset of the public Azure's menu of services.
While Microsoft hasn't publicly detailed features included in Azure Stack, slides presented at the private briefing indicate that few of Azure's PaaS services made the initial cut, the notable exception being the Web Apps Service. Azure's Mobile and IoT services will have to wait and some requiring sizable infrastructure like HDInsight and Machine Learning may never be included with Azure Stack.
Azure Stack might run on a single machine, but developers shouldn't expect to install it on their PC because the PoC hardware requirements are significant. You'll need at least a 12-core machine with 96 GB and four disks. Our lab machines had over twice this capacity and still got bogged down on certain operations. A minimal Azure Stack deployment will require four 16- to 32-core servers with at least 128 GB memory and multiple disks. Like VMware EVO RAIL, Microsoft expects most deployments to use purpose-built hardware pre-integrated with the Azure Stack software, although a DIY option is possible for those willing to closely hew to an as-yet-to-be published hardware compatibility list.
Azure Stack represents the logical endpoint of a hybrid cloud strategy: the same technology stack available for rent as a shared service or for sale as a private cloud.
While not uniquely qualified to "bring the full power of a true hybrid cloud platform" to market as Mike Neil, CVP of Enterprise Cloud for Microsoft says in announcing the preview, I agree that it's one of a handful of companies that can credibly make that claim. Indeed, given Microsoft's presence in enterprise data centers and expertise running one of the world's largest suite of cloud services, it's certainly the best positioned.
Azure Stack solidifies Microsoft as the safe, familiar enterprise cloud alternative to AWS. Don't expect Azure to unseat AWS anytime soon, however its mix of familiar services (AD, SQL Server), developer support (Visual Studio, .NET) and seamless hybrid infrastructure integration means Azure will appeal to a much broader enterprise audience.
Microsoft's Azure strategy presents much more significant threats to the two other oft-mentioned hybrid cloud alternatives: OpenStack and vCloud. Although both will have adherents in particular niches like academia and HPC (OpenStack) or organizations already committed to VMware's vision, neither can foreseeably deliver the gamut of platform services across public and private clouds to a customer base already comfortable with many of the management and development tools.
Key to assessing how fast Azure picks up momentum will be the pace of adoption by service providers and OEM partners, not enterprises. If Dell, HP, Lenovo and others flood the market with a variety of Azure-integrated products, perhaps in conjunction with a branded shared service, ISPs build regional Azure clouds for emerging markets and industry verticals and trusted channel partners push Azure to their mid-market customers, forget VMware or IBM, even Amazon will take notice. That's a big ask but not impossible.