3M, based in St. Paul, Minnesota, halved costs by entrusting the program to Microsoft's machines instead of its own, said Jim Graham, technical lead for the program.
Cloud computing can make it affordable for companies to tackle projects that previously would have required purchasing and maintaining tens of thousands of servers.
"Look at the so-called quants on Wall Street," said Microsoft General Manager Bill Hilf. "They say 'I want to ask a question but it's going to take me 20,000 servers to answer."
Each time that happens, banks don't want to build a new server farm. They want to just access those machines as needed.
Getting customers on board wasn't easy. During Microsoft's mid-year reviews, a series of meetings in hotel ballrooms near Microsoft's campus early this year, executives got a sobering message from sales staff, Muglia said. Customers weren't convinced Microsoft took its cloud push seriously, Muglia said.
Bet Hedging No More
"When we talked about choice, what they heard was we were hedging our bets," he said.
Microsoft sales chief Kevin Turner decided that the pitch needed to change. Rather than discussing various options, Microsoft's sales force has altered its pitch to "lead with the cloud" and now focuses customer meetings on cloud technologies, Muglia said.
Microsoft's biggest challenge in cloud computing may come from Seattle-based Amazon. The online commerce provider generates about $500 million in sales from cloud services, more than five times Microsoft's cloud-related revenue, according to Friar.
Amazon Chief Executive Officer Jeff Bezos has said Amazon Web Services, which includes the company's cloud services, will eventually be as large as his company's electronic-commerce business, which makes up 97 percent of the company's sales. Neither Amazon nor Microsoft discloses cloud-related revenue.
Eoin Treacy's view I have posted a number of reviews of
Cloud computing related companies over the last year, the most recent of which
appeared in Comment of the Day on October
13th. Technology remains a primary Fullermoney long-term investment theme
and is one the USA's great hopes to grow its way out of economic trouble. Cloud
computing carries the hallmark of a technology that is likely to continue to
drive earnings growth over the medium term and related shares have performed
Warren Buffett's maxim,"the investor of today does not profit from yesterday's growth" came to mind when comparing the charts of Amazon and Microsoft. Amazon has clearly been a leader in this emerging technology and hit another new high this week. While somewhat overextended, reversions towards the 200-day MA are likely to continue to offer buying opportunities for investors ready to take a medium-term bullish outlook.
Microsoft has been a laggard by any definition but is cash rich and has a successful record of selling to large businesses. These remain the single biggest potential customers for cloud computing service providers so if Microsoft can come up with a viable solution, it cannot be disregarded. The share has been rangebound mostly between $20 and $30 for much of the last decade. It found support in July near $22.75 and has held a progression of incrementally higher reaction lows since. Prices are now testing the 200-day MA and a sustained breakout from the three-month range would likely indicate a return to medium-term demand dominance.
The most obvious leverage to the cloud computing theme lies with the sector's leaders such as Amazon and others. However, we cannot discount the potential for large companies such as Microsoft, Apple and Google to garner an increasingly large share of the market as they take a more dedicated approach to improving their own offerings.