Outlook for Microsoft's move into cloud computing? Cloudy.

By Steven Overly
Monday, July 12, 2010

Microsoft has long been sustained by the swarm of resellers and consultants that peddle its products to millions of clients in every domain, from small business to the public sector.

The software giant's 640,000 global partners account for 95 percent of its revenue, which totaled more than $58 billion last fiscal year. Like worker bees to a hive, they keep Microsoft humming.

As 8,800 partners convene here this week for the annual Worldwide Partner Conference, the Redmond, Wash.-based company plans to deliver a succinct message: We're moving to the cloud and need you to follow.

About 70 percent of the company's employees now work on cloud-related products, said Jon Roskill, who became corporate vice president of Microsoft's partner group on July 1. That percentage will climb to 90 in the next two years.

"Everything at the company right now is going to the cloud in one way or another," Roskill said. Some partners have begun to move in that direction, but "it's time for the rest of them to get on board and come with us," he said.

But some local partners raised concerns that have been echoed throughout the industry about cloud computing, a burgeoning trend whereby organizations receive remote information technology services and software through the Internet.

Stephen Hall formed District Computers 11 years ago while studying at Howard University. The company, which began as a tech squad for Best Buy and CompUSA customers, now consults with about 50 small and mid-size companies. He is also one of about 300 Microsoft partners in the Washington area.

While his image appears in some promotional materials for the conference, Hall said at times that he has been critical of Microsoft's ability to keep pace with competitors such as Amazon and Google.

"I think that did serve as a wake-up call to Microsoft," Hall said of the competition. "I think [Microsoft was] a little slower than the world would have liked to have seen."

One of Microsoft's stumbles has been in smartphones, where its Windows Mobile and Research in Motion's BlackBerry lost market share to Google and Apple during the first quarter of this year, according to Nielsen data. News leaked on tech blogs at the end of June that Microsoft canceled its Kin One and Kin Two phones just months after they reached store shelves.

However, Microsoft's Web-enabled Office 2010 applications, which Hall has piloted while in beta, demonstrate substantial progress, Hall said. Recent incarnations of products such as SharePoint, a collaboration platform, and Azure, Microsoft's cloud computing software, are also available.

"Microsoft has their offering ready," said Hall, who is involved in the local chapter of the International Association of Microsoft Channel Partners, an independent partner network. "Because of Google and the open source and other vendors, it's made them raise their bar."

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