1) The blog makes the assumption that Microsoft’s cloud offerings only run in its datacenters. MS provides a services platform and a server platform, and both can be used to offer cloud services. There is a revenue opportunity for private cloud, IaaS and SaaS with both of these platforms. We have a very healthy hosting partner network, i.e. Amazon, that is hosting enterprise workloads and applications on via Windows Server, as well a strong ISV and developer ecosystem that is developing applications for Windows Azure network. With the Windows Azure platform appliance, that network (and opportunity) just grew tremendously.

2) Regarding Azure, the blog emphasizes that only Microsoft is offering Azure. With the appliance announcement, there will be more opportunities for Microsoft partners to offer cloud services based on Azure, such as Dell, HP and Fujitsu.

3) As Windows Azure services will be offered by more vendors, the risk of MS lock in or MS controlling the account is decreased.

Microsoft AR Team

I’m not a Microsoft partner and we have a Java strategy. I read the posting more for background information, but one thing struck me as odd. Your Weakness Item 5 on globalization. I think that you should consider this to be a strength of the Cloud business model. And, I think that there is a different way to look at Weakness Item 3 on volume. I find myself oddly supporting Microsoft.

Globalization is Here Already
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Many smaller ISVs who are Microsoft partners have focused on regional markets. The pre-Cloud business model made scaling local companies to become global players very difficult. Selling was face-to-face. Communications and travel for sales, implementation and support was expensive. (VoIP has made a big dent in some of these costs.)

Smaller ISVs are being affected by globalization where competitors come from a different State, Country and Continent. The distribution channel is becoming more efficient. So, the small ISVs must sell globally because the world is coming to their markets. Azure or any development/deployment platform that enables ISVs to sell globally is a good thing. Of course, there will be a “survival of the fittest”, and many ISVs will fare poorly.

Differentiate with Value
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Weakness number 3 suggest that ISVs will need to move to a volume business. But is this true? My sense is that Cloud computing, the commoditization of the stack, open source etc. are trends that are showing that value is in the application that users touch. Much less in the middleware. So, ISVs with strong vertical (or even micro-vertical) expertise may be able to leverage cloud computing for the long tail – perhaps expand in volume somewhat, but really to add more and more value. The old model seemed to favour the vendors who genericized software rather than those who added value, particularly for those organizations involved in very unique areas – these businesses had to customize. I think that Azure may help Microsoft ISVs to establish global beachheads. Many customers have reached the point of diminishing returns with customizing generic ERP applications. This model may be an attractive alternative for them. ISVs may not have to give up much in pricing to achieve high volumes if they can prove value and lower TCO.

Have fun in DC. It’s been cooling down here to the low 90′s in the past few days

Doug