Flying into the cloud

Microsoft's online platform could transform company

Windows Azure, the basis for Microsoft's venture into cloud computing, is the brainchild of Ray Ozzie. (Microsoft Corp. via Associated Press)

Microsoft Corp., moving to counter the push by Google and Amazon.com to offer software and services online, yesterday unveiled a "cloud computing" platform that will reshape its own business model and fundamentally alter the environment for software developers.

The platform, called Windows Azure, is envisioned as an operating system for the Internet, the foundation for a host of Web services for businesses and consumers - from live meetings to social networking to synchronized file sharing - that Microsoft plans to roll out, starting next year. It may represent the biggest strategic shift for Microsoft since it released the Internet Explorer Web browser in 1995.

Azure is the brainchild of Ray Ozzie, the Massachusetts technology guru who replaced Bill Gates as Microsoft's chief software architect in 2006. He promptly launched a program aimed at moving the company's center of gravity away from its proprietary desktop software to a new generation of Internet-based products and services. Software run on Azure will be housed in Microsoft data centers rather than on its customers' computers, and can be delivered on mobile devices like laptops and smart phones.

Microsoft yesterday released a "community technology preview," a set of software codes and configurations, to tens of thousands of developers. While many have written desktop computing programs for Microsoft in the past, others are software developers already operating in the faster-moving Internet environment.

"It's a transformation of our software and a transformation of our strategy," Ozzie told more than 6,000 developers gathered at Microsoft's Professional Developers Conference in Los Angeles.

Microsoft historically has shared new technology with its extensive developer network to get feedback before it's released to the public. Developers will get to use Azure free of charge while it's being tested, but eventually will be charged to write software on the platform.

"When we're cooking up something new, we go to our developers before anyone else," said Tim O'Brien, senior director for platform strategy at Microsoft's headquarters in Redmond, Wash.

Last night, Ozzie said Microsoft hopes companies and other organizations will embrace Azure at first for basic computing functions such as e-mail and content management, and eventually migrate their business-critical functions to the Internet platform - in effect, outsourcing their data centers to Microsoft.

"We have to prove to enterprises and the world that we can run their applications better than they can, or more cost-effectively than they can do themselves," Ozzie said.

Since he joined Microsoft in 2005, when it purchased his Beverly start-up, Groove Networks, for $120 million, Ozzie has prodded the company to get ahead of the cloud computing wave and to define a new hybrid model of delivering some applications over the Internet. "If we fail to do so, our business as we know it is at risk," Ozzie warned in a now-famous 5,000-word e-mail to his new Microsoft colleagues that fall.

But while Microsoft was readying its cloud computing system, rivals Google Inc. and Amazon.com Inc. introduced their own Internet platforms. At the same time, Salesforce.com pioneered a new business model of outsourced Web computing.

By planting its flag in the "cloud," as the Internet is known in the industry, Microsoft is bowing to the new reality. But it risks cannibalizing its subscription-based Windows and Office software businesses, which provide the lion's share of the company's profits.

Microsoft gave no details on how much it would charge developers to write software on Window Azure, or how much businesses would pay to shift computing to the new platform.

The company has quietly and heavily invested in building a data center infrastructure to support cloud computing, though it's far from clear that business can generate enough revenue and profit to offset what some analysts foresee as a gradual decline in its traditional businesses.

"It's clear Microsoft sees that a lot of software in the future is going to be served up in the cloud," said Nick Carr, a technology writer and consultant who authored "The Big Switch," a book on cloud computing published this year. "They've been a dominant player in software and now they hope to be a player in this arena, as well."

The move is partly defensive. Google, the Internet search engine giant, stole a beat on Microsoft early last year when it rolled out a series of Google Apps, or programs that mirrored Microsoft's suite of Office applications - except that they were free and geared to small businesses and universities.

Amazon, meanwhile, has been offering computing and storage to businesses through its Amazon EC2 (elastic compute cloud) platform since 2006.

"We welcome Microsoft's movement to the cloud," said Google spokesman Mike Nelson. "Choice is good for users, and their direction further validates that the future of computing is in the cloud."

An Amazon Web services spokeswoman, Kay Kinton, said her company doesn't discuss competitors. "We always thought that there would be multiple companies pursuing this space," she said.

Rebecca Wettemann, vice president at Nucleus Research in Boston, warned that Microsoft may be late to the game.

"Microsoft, welcome to the 21st century," Wettemann said. "Microsoft is playing catch-up again.

"They have the opportunity to deliver more to customers that don't trust Google to handle business-critical applications. But when you come this late to the party, you better have a nice hostess gift in terms of pricing and support."

Robert Weisman can be reached at weisman@globe.com.