Without the cloud, Microsoft may lose grasp on the enterprise

Looks to partners to help convince enterprises to switch from Microsoft software to its cloud services

Microsoft's renewed push into the cloud computing market, announced this week, doesn't change the fact that it faces unprecedented competition in a business that's critical to its future.

"This will be the toughest job Microsoft has ever faced," said Jeff Kagan, an independent industry analyst. "It's all about the Microsoft cloud. They must be successful. Unlike the past, where Microsoft really had little competition, in the cloud world they face lots of competition, so there are no guarantees."

Microsoft's Chief Operating Officer Kevin Turner, speaking at the Worldwide Partner Conference this week, urged the company's channel partners to start pushing the company's cloud technologies - hard.

Microsoft made its fame and fortune by selling PC operating systems and on-premise business software -- to the point that Windows and Office have long been ubiquitous business tools. To maintain its global position, Microsoft has to quickly make its way into cloud computing, which is becoming increaingly popular among small and large businesses looking to save money and IT resources.

If Microsoft doesn't convince its partners to help out, enterprises have plenty of other cloud options, including Google's Apps suite.

Turner told the gathering that Microsoft's cloud services -- Office 365, Azure, Dynamics CRM Online and other tools -- are growing robustly. However, he acknowledged that Microsoft and its partners need to pick up the pace.

Microsoft has relied heavily on its approximately 400,000 partners, which range from resellers to system integrators, to sell its operating systems and applications for the past 20 years or so. Now the company has to steer this vast ship in a new direction.

Robert Mahowald, an analyst with IDC, said the company has to convince its partners that there's money to be made by pushing Microsoft's cloud offerings.

"Microsoft recognizes that this is going to have a huge effect on its partners," he told Computerworld. "They need to show that their partners can make money and be successful with this. Microsoft's success is their partners' success and vice versa."

"Cloud is essentially the new platform for Microsoft," said Mahowald. "I think it's more important than mobile, big data or social. What they had in Windows, they have to replicate [in the cloud] or they lose the franchise. If their old platform doesn't matter any more, then Microsoft has lost the software lock-in that is their crown jewel."

"If customers look to the cloud and think they don't need Microsoft, then [the company] loses its grip," added Mahowald. "Microsoft has a lot riding on making this transition easy for their customers."

Jagdish Rebello, an analyst with IHS, said that Microsoft will increasingly make cloud services and the Internet of Things the cornerstones of its long-term business strategy.

"I believe Microsoft is a strong number three behind Amazon and Google in the cloud market," Rebello said. "Amazon is clearly the dominant player and has the dominant market share, but in some markets - especially the large enterprise market - Microsoft is trying to leverage its strong relationships with IT and its extensive cloud offerings. Anecdotal information indicates that they are succeeding with some key clients."

If this works for Microsoft, it also could be a boon for enterprises that have a long history with Microsoft.

"As partners look to take enterprises using legacy Microsoft solutions to the cloud, it creates a level of confidence in enterprise IT minds that there is a long-term solution for them," said Rebello. "This makes Microsoft's solutions attractive or at least part of the many options that IT will consider."

But Microsoft can't be successful without help from its partners, Rebello said. "Without a strong ecosystem of partners, Microsoft will not be a major player in this space."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at Twitter @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com

Copyright © 2014 IDG Communications, Inc.

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