Part 2 of a 4-Part Series: Thoughts on Pricing, Support & Open Source Competition
Recently, an article posited whether Microsoft was irrelevant and it spurred a great conversation between Microsoft expert and INFINIT CEO Jerod Powell, colocation expert Sean Patrick Tario, and INFINIT’s Mike Brogan and Dan Schneiderman. We’ve transcribed our chat, knowing that the Q&A would likely be of interest to more than just the four of us, and composed a 4 part blog post series from this insightful and provocative conversation. This is part 2 of the 4-part series. Read Part 1, Are Microsoft & Azure Contenders in the Cloud?
SEAN: So let’s talk about pricing. It’s one of the things people love to hate about Microsoft. Specifically, why is licensing so expensive and showing no signs of changing in light of all the different viable open source options on the market today? More specifically, is this a concern for you when you’re out in the market having to explain the drastically high licensing fees that Microsoft has on the table?
JEROD: The day Microsoft started selling cloud services they began adapting their pricing models, and even initial releases of their “BPOS” solution were priced very aggressively. If you fast forward to today, I’m not sure how their cloud licensing could be considered “drastically high” or “expensive” and, if so, compared to what, inferior solutions that aren’t built to support enterprise requirements? Azure pricing is at or below AWS pricing today, making Microsoft one of the most inexpensive pubic cloud providers in the marketplace.The same is true of the Office 365 pricing; it’s incredible what’s provided for the cost of one E3 license, the value to dollar ratio is, again, one of the most inexpensive in the marketplace.
In the market our approach is simple, Microsoft has brought their pricing in line with the industry, so it becomes purely a question of price vs. value. When you compare price vs. the value with what’s being provided, frankly it’s an easy win. Another key point to all of this is product support, documentation, predictability, accountability, and talent pool. You do not get any of those to the same degree with an open source solution as you do with a Microsoft-based solution. It’s the same reason so many companies are willing to pay so much more for VMWare than other virtualization and private cloud solutions.
I think the reality is there’s a perception that Microsoft has “drastically high licensing fees” but the truth is that the cloud has changed all of that and anyone that hasn’t looked lately should look again.
MIKE: What about support? Wouldn’t the support level be a big difference between using Microsoft Azure, versus going with a competitor like OpenStack?
SEAN: Definitely. There are only a few firms around the world currently who are “intimately” familiar and involved with the OpenStack platform and toolset. CloudScaling, Unitas Global, PistonCloud, NewContext and Metacloud are really the few I know about… and I’ve been doing a LOT of vetting on this topic.
That being said, there are more and more companies popping up every month and I think at this point there are a few thousand OpenStack instances people are playing around with, but really only less than 40 production OpenStack environments out there, and over half of them are within Rackspace… which would make sense as OpenStack effectively came out of Rackspace.
So that’s really the crux of what I’m trying to drive at, how is Microsoft positioning itself, given the growth of this market? Just as Linux and UNIX came out and Red Hat entered the market to say “We’ll manage your Linux/UNIX environments for you and provide support,” now there are companies such as CloudScaling and Unitas coming out and saying “We want to be your support contract for your OpenStack environment and help you make sense of all the different things that are being developed in that community.”
As it continues to evolve, and more people start piling on, I’m really curious where Microsoft is going to fit in the picture. Today Microsoft is still relevant on the server side and application side. Looking 5 years or 10 years down the road, will Microsoft still be a player and will they have tools that are making it very clear and obvious as to why you would want to work with them versus just doing everything open source?
JEROD: First, I think that Microsoft is doing a great job setting itself up as the leader in cloud services for communications, collaborations, and content management for both work and personal life. In 5 to 10 years the question on my mind is: how many more people will be using Office 365, what other services will it provide, and how easy will it be to add services? This is just one of their cloud services, what about the others? With Azure, you now know that all Microsoft products are moving to the cloud, which will in turn create countless application offerings and potential partner opportunities.
You mention companies like Unitas and CloudScaling coming out and selling support contracts for OpenStack environments, and the potential of people piling on as things evolve. I don’t think this is a major concern considering the 50,000+ partners Microsoft has developed and worked with over the last 30 years. For the most part, partners are loyal as Microsoft has been a trusted partner, and built the technology that has allowed us to grow our businesses. My company, INFINIT Consulting, is already offering support contracts to manage your Azure; in fact, we’ll not only manage Azure for you but also build your own private Azure, manage a Hybrid Cloud integration with Azure, or even manage your Office 365 or other cloud solutions.
The point is there will be many partners building business offerings around Microsoft Cloud Services, and as long as Microsoft continues building great cloud products and offering them at a competitive price they’ll be just fine.