By Dina Bass and Brian Womack
Bloomberg News
Tuesday, October 28, 2008

Microsoft unveiled a program called Windows Azure yesterday that stores and runs customers' data and programs in its computer-server farms, stepping up competition in "cloud computing" with Amazon.com and Google.

Windows Azure makes it easier and cheaper for clients to manage their programs, Microsoft chief software architect Ray Ozzie said at a conference for developers in Los Angeles.

Microsoft is overhauling the way it sells software as rivals offer more ways for companies to store their data on the Internet. That approach means clients don't have to worry about the cost and logistics of constantly expanding their own data centers.

While Microsoft has the resources to run data centers, its expertise wasn't "packaged in a form where it could help you," Ozzie told developers.

"They have to do this," said Rob Helm, an analyst at Directions on Microsoft, a Kirkland, Wash.-based research firm. "Amazon and -- to a lesser degree, Salesforce.com -- have already gotten their models going. There's a real risk they might completely bypass Microsoft."

Microsoft didn't disclose a release date or pricing for Azure. Ozzie said the price will be competitive and the release date depends on feedback from developers testing the software. The company released a free preview of Azure yesterday.

Spending on software delivered over the Internet, known as cloud computing, may almost triple to $42 billion by 2012, according to Framingham, Mass., research firm IDC.