In Satya Nadella’s first press conference as CEO of Microsoft in 2014, he laid out a vision for the company to be a mobile-first, cloud-first company.
On the cloud side, Microsoft has a broad portfolio of products that includes market-leading SaaS productivity applications, highlighted by Office 365. On the IaaS and PaaS side, Microsoft has Azure, a public cloud that has turned into one of the most prominent cloud platforms in the market and is considered the chief rival to market-leading Amazon Web Services’ public IaaS cloud.
Jason Zander is Microsoft Azure’s corporate vice president, which means he oversees thousands of engineers who develop Microsoft’s IaaS and PaaS platform, operate its global data centers and manage its customer support group. Zander’s been at the company since 1992 and previously held positions developing Windows, Microsoft databases and more recently the Visual Studio and .NET teams. In this conversation, Network World Senior Editor Brandon Butler speaks to Zander about the state of the cloud market and Azure’s future direction.
Amazon created the public Infrastructure-as-a-Service cloud market in the mid-2000s and for years they seemed to be the only real vendor. To this day most analysts believe that AWS has a multiyear lead in terms of features and scale of its cloud compared to competitors like Microsoft, Google and IBM. Do you think Amazon’s head start on this market complicated Microsoft’s ability to compete in the public cloud?
What I would say is that we’ve been an enterprise player basically for 20 years now. We are a company that has been very involved in the data center and the software used to run data centers historically. We’re also a company that offers technology at multiple levels. For example, if you think about it we have not only the infrastructure components but we were also a very early leader in Platform-as-a-Service and then up through the SaaS layer for things like Office 365 and Dynamics 365. I would say that our longstanding enterprise strength and the comprehensive nature of the solution that we’re offering is actually super important to us and we think that it’s been resonating really well with our customers.
You mentioned operating at different layers of the stack, including IaaS, SaaS and PaaS. How much do Microsoft Enterprise applications like Office and Office 365 drive Azure sales? I’ve heard reports that Microsoft gives away free Azure credits with Office 365 Enterprise agreements. Is that true and does that still happen today?
Having Office 365 out there and pioneering in that space, that certainly paves the way for additional wins. A great example of this is that when you’re using Office 365, you’re also using Azure Active Directory to track all your user IDs. It turns out that Azure Active Directory is also a great way to integrate the rest of your enterprise applications. Once I get going, it becomes easier and easier to start taking some of my new line of business work and now I’ve got that comprehensive solution.
Another good example is SharePoint: It's very popular and works very well if I have SharePoint Online. I can also augment it with my own business applications and the identity works, so it’s all in the same cloud with low latency on data access. The way we help customers is if you decide to start on your cloud journey with one of these components it’s easy to adopt the next because they really are designed to integrate very well together.
Can you provide insight on how large of a business Azure IaaS is? Microsoft breaks out revenue for the Intelligent Cloud but I believe that also includes on-premise software. Why doesn’t Microsoft just break out IaaS public cloud revenue?
Our Azure revenue grew 116 percent in the most recent quarter, which is up 121 percent in constant currency year-over-year. If you think about the Microsoft Cloud, which combines infrastructure, PaaS and SaaS offerings like Office 365, Azure and Dynamics, those components are growing super healthy. From an accounting perspective, we haven’t broken out the specific revenue for IaaS and I’ll defer to our business and finance folks that manage those components, but I’ll tell you the thing I do, especially in engineering, is look at what the demand is and it’s crazy off the hook. I’m building out stuff as fast as I possibly can. We deploy more servers in a day now than we did in an entire year in 2011 and that just continues to compound. I’ve got the team cranking 24/7/365 just to keep up with the demand.
How would you classify the most common workloads that are hosted in Azure now? Are the majority still test and development?
I’d say that in this public cloud space in general, the journey that many will start off on is from a SaaS layer they’re going to use Office 365. Then when you get into Azure, then it’s very common to start off with your websites that you’re trying to make public for B2C engagement. DevTest is certainly another big one. There’s also a lot of work around hybrid scenarios, even starting off with simple things like doing backup, disaster recovery and being able to failover from your own data center into our data center. Those all make sense for a lot of companies.
What we’ve started to see mature in many markets is they’re now looking at all their mission-critical workloads. Recently we’ve done more things like SAP deployments, which are basically the anchor store of your IT mall. These types of big enterprise apps are now starting to move into the cloud as well because you can get the same cloud advantages as some of those lower tier apps that have made the move.