Microsoft Emerges as Clear No. 2 in Cloud Computing


In 2008, two years after Amazon entered the cloud market, a team of the Microsoft’s brightest scientists set to work on a cloud project, code-named Red Dog. In 2010, Microsoft introduced its cloud service, but it did not have an offering comparable to Amazon’s until 2013, analysts say.

Before he became Microsoft’s chief executive in 2014, Satya Nadella held senior roles in its cloud, online services and search businesses. Once he took over, Mr. Nadella accelerated investment in the cloud unit and focused Microsoft’s sales teams on the business, analysts say.

Unlike his predecessor, Steven A. Ballmer, Mr. Nadella’s career was not steeped in Windows and the business model of packaged software. The traditional software business relied on product licenses with hefty payments up front rather than the pay-for-use subscriptions of the cloud world.

“Technology was not really the obstacle for Microsoft, the problem was the business model,” said Michael A. Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “Nadella has changed the strategy and the culture.”

Amazon holds some formidable advantages in the cloud market. It has the most customers — some spending more than $100 million a year — and more than 2,000 consulting partners to help companies use increasing amounts of Amazon cloud services. Many corporate technology managers see Amazon as the safe choice.

But Microsoft has the advantage of being mainly a supplier of technology to businesses, unlike Amazon and Google. Its longstanding relationships with corporate customers, analysts say, are helping Microsoft gain ground as mainstream companies increasingly move to cloud technology. Microsoft has recently announced cloud deals with companies including Walmart, General Electric, Bayer, Starbucks and Campbell Soup.

Microsoft’s offerings have steadily improved, but even Mark Russinovich, chief technology officer for Azure, the cloud processing and storage unit, points to the company’s roots in business as a driving force.

“The relationships we have with companies, understanding their needs, is really helping with these migrations to our cloud,” Mr. Russinovich said.

Swiftype Reports

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