Windows 8? It Won’t Win Microsoft’s Biggest Battle

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http://www.wired.com/2012/10/epic-microsoft-windows-fight/

Bill Hilf, the general manager of Microsoft’s Azure group. Photo: Microsoft

As Microsoft readies the release of its Windows 8 operating system, the company is facing some tough questions about whether Windows is going to remain the world’s most popular desktop operating system or slowly fade away.

But there’s another battle that’s been brewing for years. It’s in the cloud: the fight for the hearts and minds of the geeks who will be writing the online apps we’ll be using on our desktops, notebooks, smartphones, iPads and, maybe,Microsoft’s Surface tablets. So far, it’s a battle that Microsoft is losing.

Ten years ago, there was one way to get your code onto the internet and corporate networks. Software developers would crank out their software and then install it on a computer running in a nearby data center. That’s a model that worked out well for Microsoft, and it’s still paying dividends. The technology research firm IDC says that Windows runs on about 69 percent of all servers. The open source operating system Linux comes in second, at 26 percent, with Unix and mainframe operating systems trailing after that.

But now, you can run your applications on cloud services operated by the likes of Amazon, Google, Rackspace, and, yes, even Microsoft. You don’t have to set up your own physical servers. You can just spin up virtual servers from your web browser. And in this world, Microsoft is well behind.

That’s because the building blocks of what we call cloud computing have been cooked up by the users rather than technology vendors — companies that have been forced to slap together their own own back end systems. And these tinkerers like source code, according to Tim Burke, vice president of Linux engineering at Red Hat. “That really plays into the open source type of model,” he says. “I think that’s fundamentally why Linux has been the dominant use case.”

At Wired’s request, Newvem — a company that sells management services to Amazon cloud customers — took at look at about 41,000 cloud machines run by several hundred customers. Its conclusion: Linux is twice as popular as Windows on Amazon Web Services. It was running on 67 percent of machines, compared to Windows’ 33 percent.

That Windows number was actually higher than Newvem Chief Technology Officer Ilan Naslavsky expected. Linux, he says, is far and away the top choice for startups, who tend to be the most active users of Amazon’s infrastructure. Amazon appeals to new companies because it’s dirt cheap to get up and running. You can set up a Linux machine on Amazon starting at $0.08 per hour; Windows starts at $0.115.

Amazon doesn’t release its own cloud usage numbers, but its chief rival, RackSpace, does. On the RackSpace cloud, the split is even starker: 75 percent to 25 percent, again in favor of Linux. The new HP Cloud doesn’t even support Windows, although an HP spokeswoman says that it will soon. And last June, Microsoft itself was forced to rejigger its own cloud service, Windows Azure, so that customers could use Linux as well as Windows.

The problem here for Microsoft mirrors the trouble it’s had on the mobile apps front: It just may not be cool enough to qualify, especially in the startup world. Microsoft is for the corporate types, says Kimberly Peterson, chief technology officer with Magnify.net, a company that sells online video services to websites. Magnify.net uses Amazon Web Services for some things, though it installs its Linux on machines the old-fashioned way, in a corporate data center.

“There’s a prevailing attitude that Linux provides you with the luxury to customize and tweak your environment to your heart’s content,” Peterson said in an email interview. “Windows, on the other hand, is closed-source, untweakable. Windows is desperately uncool.”

Well, if Microsoft is unhappy about this, it’s crying all the way to the bank. Microsoft’s $19 billion server business was the bright spot in the company’s recent earnings, growing by 11 percent over the past year. AWS is only six years old, and so right now, not enough people are using the cloud for it to make a big dent in Microsoft’s earnings.

The big risk is that if everybody writes cool new apps using Linux on the cloud, Microsoft’s $19 billion business could wither away.

Microsoft knows that cloud computing is the future. In its most recent annual Securities and Exchange Commission 10-K filing, the company spelled it out: “Computing is undergoing a long-term shift from client/server to the cloud, a shift similar in importance and impact to the transition from mainframe to client/server,” Microsoft said.

And that means that the Azure service needs to pan out. “Microsoft is turning into a devices and services company,” says Bill Hilf, the general manager of Microsoft’s Azure cloud computing platform, echoing something that Microsoft CEO Steve Ballmersaid earlier this month. “Azure is the core platform for all of these things.”

Microsoft’s big advantage here is its foothold in corporate computers — those 69 percent of the metal servers that are already running Windows. Hilf’s plan is to make it easier for big companies to move to the cloud without rooting out their decades-long investments in Microsoft’s products.

For this to work, he may have to compete with much narrower margins than Microsoft’s server group is used to. Microsoft’s big bet, however, is in developing brand new really useful cloud services — services for smart phones or for video delivery — that companies will pay good money to use. There, he thinks Microsoft has an advantage over Amazon. “They know low margins because they’re a retailer, but the value, long term, of the cloud is not just cheaper IT hosting. It’s really how do you build applications that are using higher level programming services.”

Tags: Amazon Web Services, Azure, cloud, Linux, opensource, operating systems, Servers, Software as a Service,Windows

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