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October 1, 2007

Microsoft Online and Live "cloud" services: Differences and similarities

Posted by Benjamin J. Romano at 2:05 PM

A reader wrote in today to ask how the new Microsoft Online services for businesses, described in a story today, are different from the cloud services Microsoft is working on.

"Cloud services" refers broadly to the "services" part of Microsoft's "software plus services" strategy. (And yes, I find this stuff a bit confusing, too.) Until now, these have mostly been focused on consumers and small businesses.

The biggest differences with the new business-focused services, I would say, is the specific software functions they will augment or replace, and the end users Microsoft has in mind -- namely business decision makers, IT professionals and what the company refers to as information workers.

So, for example, Microsoft Exchange Online will basically allow Acme Corp. (a large company with 5,000 or more Exchange users) to outsource its corporate e-mail system to Microsoft. Microsoft says Exchange Online will function just like an on-premise instance of the software, but instead of Acme investing in its own servers, server software and IT staff to deploy and manage Exchange, the company would instead pay a regular per-user subscription fee to Microsoft. Microsoft would run Exchange on its servers, in its data centers, and deliver the functionality to the Acme via the Web.

The consumer-focused services are different. If you're using Windows Live Hotmail, for example, you're getting e-mail as a service, funded by the advertising you see whenever you log on. Xbox Live is a little bit different in that you pay a subscription to be a member of the network and play games with your friends.

But what's most interesting about the "software plus services" strategy are the similarities rather than the differences between the various services.

As I said, the services differ in function and end-user. But the underlying cloud infrastructure they rely on -- the servers, data centers, load-balancing and management software, security and identity software shared by many Live services, and technical expertise to keep them running -- is shared by them all. Microsoft hopes to benefit from this economy of scale.

"We're taking a platform approach to services, giving each of our products the common benefits of cost, speed, scale and monetization that a platform approach offers," Microsoft Chief Software Architect Ray Ozzie said at the company's Financial Analyst Meeting in July. "... This platform will ultimately be used by and will benefit all of the audiences that we at Microsoft serve."

Here's a transcript of Ozzie's remarks. And here's a story I did in August explaining the cloud infrastructure in some detail.

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