PDC Part V: Come On, Someone Has to be Threatened with Windows Azure and Microsoft Cloud Hosting

Microsoft’s Cloud initiative and Windows Azure will provide businesses with yet another choice for hosting. While I do not believe that the traditional web hosting provider business model is dead as a result of Microsoft’s strategy, some vendors and hosts may feel a disproportionate amount of impact on their businesses. The promise of the “Cloud” is still far away but here is my take on hosts/vendors to watch.

Existing Cloud Hosting Providers and New Cloud Service Entrants
The obvious businesses that will need to keep any eye out on Microsoft will be those that are currently offering Cloud Hosting today – the big one being Amazon EC2 (who Ray Ozzie tipped his hat to during his Day 1 keynote), and newer entrants into Cloud computing, like IBM, and EMC…etc. Functional hosts with larger hosting aspirations will also be watching Microsoft – like Google. And, if you read the tech headlines, you will see press releases practically every day of some player introducing some Cloud services. How will these Cloud hosts move forward with innovation to compete with Microsoft’s Cloud initiative?

Cloud Infrastructure Software Companies
To support the foundation of Cloud hosting providers, there are software companies, such as 3Tera, that will be impacted with increased choice in Cloud infrastructures. Which Cloud infrastructure vendor will businesses bet on? We shall see how this plays out.

And I would add Virtualization software vendors to watch, like VMWare and Parallels, who provide the virtualization platforms for hosts. Virtualization helps make Cloud computing possible, so how will Windows Hyper-V and Microsoft’s S+S strategy impact their businesses?

Exchange and SharePoint Hosts
Among the traditional hosts you may see some impact for hosts that are offering an out-of-the-box experience for Exchange hosting and SharePoint hosting.

Last year Microsoft stated their intent to offer hosted Exchange and SharePoint for large businesses with a large number of seats, like Energizer. This year, Microsoft announced their intent to offer Exchange and SharePoint hosting to anyone. At the Worldwide Partner Conference 2008, Microsoft announced a revenue model around these services. Microsoft’s Exchange and SharePoint hosting is still in beta, but its coming.

If a host is offering an out-of-the-box experience and not intending to innovate on top of Exchange or SharePoint, then their customers will have another choice with Microsoft services.

Dynamics CRM Hosts
Microsoft is also getting into hosted Dynamics CRM services. Honestly, I do not really keep an eye out on this market segment so I’m not sure how this niche operates. But just like Exchange and SharePoint hosts, if these hosts are not intending to innovate on top of Dynamics or offer other value added services, then businesses that need Dynamics will have another choice with Microsoft.

Dedicated hosts
Customers using dedicated servers for their sites must make sure that their servers can handle peak traffic to their site. But, most of the time, their servers are not experiencing peak load. Therefore, the customer is paying for idle resources for their piece of mind.

The promise of the cloud is an elastic hosting system that can flexibly grow and contract as you need services and on top of that, it’s an utility pricing schedule – that is, you pay for what you use.

With the economic downturn and expected slower growth, a Cloud service could be another choice for businesses. This is the reason why Rackspace has launched their own Cloud Hosting services under the Mosso brand. I wouldn’t be surprised to see other dedicated/managed hosts launch their own Cloud services. What other value added services and innovations will Dedicated hosts introduce to compete with Cloud computing?

Takeshi Eto
VP Marketing and Business Development
DiscountASP.NET

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