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An inside look at Microsoft’s booming cloud business

An inside look at Microsoft’s booming cloud business

The ability to host Azure infrastructure on premise in a hybrid role is a key differentiator

As Director of Program Management for Azure at Microsoft, Corey Sanders heads the compute team which is responsible for the VM-based offerings on Windows and Linux, the new microservices platform, and container services, among other things. Sanders joined the Azure team about six years ago, before which he was a developer in the Windows Serviceability team. Network World Editor in Chief John Dix recently visited Sanders in his Redmond, WA, office to get a better sense of how Microsoft’s cloud business is taking shape.

Corey Sanders, Director of Program Management for Azure, Microsoft

Corey Sanders, Director of Program Management for Azure, Microsoft

Let’s start with a big picture view of Microsoft’s cloud efforts, what the company offers and how the pieces fit together.

We like to break down our overall cloud offerings into three big buckets. One is SaaS based solutions like Office 365 and Dynamic CRM, and we think of these as being the fastest time to value for customers. They can sign up and immediately get the benefits the cloud offers, like massive scale and global coverage, without much change to anything they’re doing. That’s the top level.

There there is the infrastructure level, which is a lot of the work I do. This offering is about virtual machines, application mobility, lift-and-shift type workloads, taking your data center and moving it to the cloud. And the third category is higher level or advanced services that make it simpler to scale, simpler to get high availability and build next-generation applications that really take advantage of cloud agility.

We have competitors that offer just SaaS solutions and we have competitors that offer just infrastructure and platform solutions. We feel we’re uniquely positioned to offer all three.

Do you break out revenue for the segments?

We don’t break out revenue, but our annualized cloud revenue is $9.4 billion. I will say that revenue for the infrastructure and advanced services that we combine as Azure is up 140% year over year. We’re adding 120,000 Azure customer subscriptions per month.

Can you give us a thumbnail description of the physical plant that supports all of this?

We break down our global coverage into regions, with the goal of being close to customers with low latency, and also having scalability within those regions. We’ve announced 30 of these globally and 22 are live today. They are of varying architectures and varying sizes, and a lot of that is based on when they were built. They keep up with hardware innovation and physical build-out and cooling systems, and so on. Almost all regions have multiple data centers.

Is there a total data center count or total server count that would help put it in perspective?

We don’t share those numbers publically, and frankly, even if we did, by the time we said it they would have already changed.

On the Azure front, is there a typical user profile emerging?

It’s a great question. One of the exciting parts about Azure is it’s a broad, open, diverse platform that includes everything from services built from .NET microservices to partnerships and solutions with Linux providers. This wide variety of solutions has resulted in an amazing variety of customers.

We’ve seen a huge uptake in enterprises using both infrastructure and advanced services. Folks like DE Healthcare, Alaska Airlines and NBC are using the platform for both existing applications and next-generation apps. But we’re also seeing new customers and startups using open-source parts of our platform. Jet.com is a good example, an e-commerce site based in New Jersey that is deployed completely on Azure. It’s been pretty impressive to see the amount of growth from startups and ISVs. In fact, I think 40% of our revenue today is driven by startups and ISVs.

So, we’re seeing small companies do big things and we’re seeing big companies do some small things. It’s running this amazing range of opportunity from customers and partners. I would be hard-pressed to give you a sense of either the size of the company or the size of the workload that the companies are typically deploying.

How about use cases? Are there particular use cases that are more prevalent?

The first wave for many customers follows similar patterns. We see a lot of development and tests in the cloud, and we see a lot of bursting workloads. We recently had Milliman [an actuarial and risk management services company] on stage at our Build conference showing how it can burst actuarial risk analysis workloads, which was a really exciting example of the flexibility and versatility the cloud brings.

So these use cases are getting really hot, and both take advantage of that immediate on/immediate off capability and having huge amounts of compute power to deploy quickly. But we’re also seeing an uptick in full data center migrations as enterprises big and small start looking at their next wave of capital expenditure. There is more excitement around, “Let’s just move everything.” We have a few customers that are in the process of doing just that, but none have actually made public statements yet.

I would imagine most enterprises would be afraid to put all their eggs in one basket.

We’re seeing a lot of interest in multi-cloud deployments and hybrid deployments where customers deploy both on-prem and in the public cloud and have bursting capabilities between the two. In fact, one of the things that differentiates us from other cloud providers is our focus on multi-cloud with our own Operations Management Suite (OMS) that allows monitoring across multiple clouds.

How about disaster recovery?

Disaster recovery and backup are two additional hybrid services we offer. Both are popular and growing quickly and we’re seeing them coupled with solutions like

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