Is Microsoft's Cloud Bet Placed on the Ground?

Today at the Unversity of Washington, Steve Ballmer gave a speech on Microsoft's cloud strategy. Significantly, Azure was only briefly mentioned and was not shown. Instead, Ballmer spoke about what he called the five "dimensions" of the cloud, and used that as the basis for an almost philosophical discussion. Ballmer opined on how the cloud should be distinguished from the Internet, as well as what the cloud will and should enable. Ballmer worked hard to portray the cloud not as a challenger to Windows and PCs (as Google would certainly suggest it is) but really as just the latest peripheral that adds value to PCs and devices.

At one point during his speech, Ballmer said, "We start with Windows at Microsoft. It's the most popular smart device on the planet. And our design center for the future of Windows is to make it one of those smarter devices that the cloud really wants."

I'm not sure I agree with Ballmer's ambition here, but I must admit he's taken the "software + services" concept and expanded on it in more consumer-friendly fashion.

There were demos too. For example, Blaise Aguera y Arcas reprised his Bing Maps demo from the TED conference held last month. And Simon Atwell showed how Microsoft has teamed with Sky TV in the UK to turn Xbox into something that looks uncannily like Windows Media Center. Specifically, an Xbox console app called Sky Player provides full access to Sky's on-demand programming but also live TV access to an array of networks carried on its home TV service, complete with an on-screen programming guide. Windows Phone 7 Series was shown quickly and Ballmer told us that while Windows Mobile/Phone 6.5 and earlier were designed for voice and legacy functionality, Windows Phone 7 Series is designed for the cloud.

Over and over during Ballmer's talk (and those of his guest demo presenters), the message was clear: Microsoft believes that client ("smart") devices, and not mere HTML terminals, are the technologies to best deliver on the promise of the cloud. The message was that PCs running Windows, game consoles and smart phones whose native interfaces are Internet-connected offer the most effective way to utilize cloud capabilities. Even the Bing Maps demo conveyed this message, because the advanced technology shown in the demo used Silverlight (and thus the PC's computing power), and not AJAX (which relies only upon the browser's native scripting and rendering capabilities) to produce the impressive interface shown to the audience.

Microsoft's new slogan, with respect to the cloud, is "we're all in." Just as a Texas Hold ‘em player bets his entire stash of chips when he goes all in, so too is Microsoft "betting the company" on the cloud. But it would seem that Microsoft's bet isn't on the cloud in a pure sense, and is instead on the power of the cloud to fuel new growth in PCs and other client devices, Microsoft's traditional comfort zone. Is that a bet or a hedge? If the latter, is Microsoft truly all in?

I don't really know. I think many people would say this is a sucker's bet. But others would say it's suckers who bet against Microsoft. No matter what, the burden is on Microsoft to prove this contrarian view of the cloud is a sensible one. To do that, they'll need to deliver on cloud-connected device innovation. And to do that, the whole company will need to feel that victory is crucial. Time will tell. And I expect to present progress reports in future posts.

Posted by Andrew J. Brust on 03/05/2010