Can hosting partners make any contribution to the Microsoft cloud?

I was telling Suren Singh (who is a Hosting Solutions Manager at Microsoft) that I'm not sure it'd be wise for a web hosting provider to consider MSFT its partner. Microsoft is investing zillions on its data centers, in which server count has doubled over the past year. It's already hosting Exchange and SharePoint for Energizer and plans to sell hosted services to others "vigorously and transparently". The reassurances it gave at its partner conference earlier this month were fuzzy at best...

In retrospect, my objection was poorly phrased. What I should have said was, I'm not sure how much sense it makes for Microsoft to have a hosting partner program.

The day before yesterday, Ray Ozzie outlined the three layers of Microsoft's software + services platform in his presentation to Wall Street analysts. These include:

1. Global Foundation Services: huge data centers in which "reliability is achieved through redundancy, not the fail-safe nature of any given component"

2. Cloud Infrastructure Services (which Nicholas Carr calls the Cloud OS): virtualized utility computing fabric with application framework that supports horizontal scaling and manages load balancing/performance optimization

3. Live Platform Services: data and features - such as identity management, contact lists, user presence and advertising - that are shared across multiple Microsoft and 3rd party apps

Now, in which of these layers can a commodity hoster make ANY contribution?

Ozzie went on to describe Microsoft's target audiences. Individuals, he said, will enjoy connected entertainment and productivity. Companies will be able to move their IT infrastructure into the cloud at the "lowest, lowest possible cost". And developers will have limitless access to computing and storage capacity at "very, very low cost".

(Quote from CNET: "Microsoft is trying to make sure that its business terms are attractive enough to woo the next MySpace or YouTube to bet on its technology. It has spent months talking to existing partners, but also to venture capital firms and start-ups. For now, Microsoft is offering up many of its services free for up to 1 million users, while saying it wants to strike some kind of deal if a service exceeds that threshold.")

Let's think - can traditional shared/VPS/dedicated hosting providers help deliver any of these benefits, considering their track record of fostering NO connections between customers and stranding user data on non-redundant, stand-alone servers?

Ozzie did acknowledge that some companies will want to maintain on-premise servers ("the ultimate in customization and control") and others will work with partners to “take advantage of unique vertical expertise or vertical solutions”. Unfortunately, I don't think such expertise/solutions are available from 99% of the folks Suren met at HostingCon.

Ozzie's vision reminded me a lot of Amazon Web Services, for which its evangelists have built a vibrant developer ecosystem. Why, in contrast, would Microsoft want to sign up hosting partners who are not at all equipped to advance its cause?

PS - Duncan Strong from Melbourne IT made a more compelling case for Microsoft's hosting partners program than any Microsoft employee I've met. He said since MSFT product managers have P&L responsibility, they generally gear development efforts toward distribution channels that deliver the highest ROI. Up until now, the hosting channel has done better than Xbox Live, let's say. But... software + services is sooo much farther from traditional hosters' core competency than Windows Server SPLA licenses.

Comments

While I generally think you have good insight into the hosting industry, I think you're off base here. While Microsoft may have offerings that compete on some level, hosters can easily find away to differentiate or add value. Companies that don’t have a Microsoft offer are missing a huge revenue opportunity, just as those who don’t have an open source offering. Microsoft is not looking to manage customers application servers, provide customized email services, host websites, etc. I’m curious what other Fortune 500 company you think does a better job partnering than Microsoft.

[Isabel Wang]

The issue is NOT whether Microsoft (or any other vendor) does a good job partnering. It's whether hosters are worthwhile partners.

I disagree that "hosters can easily find a way to differentiate and add value". They can't! They haven't!! Did you see The Planet's "we'll charge 10% less than your current provider" offer at HostingCon? THAT is what hosters know how to do. Race each other to the bottom. Offer more bandwidth/webspace at lower costs.

Neither Microsoft nor any other vendor will be able to give commodity hosters a "huge revenue opportunity". They will just squander it on price competition or outrageous affiliate commission payments.

I also disagree that "Microsoft is not looking to host websites". Have you not heard of Office Live's free domain registration and free web hosting?