70% of Microsoft cloud 'wins' are new customers

Microsoft COO Kevin Turner made the bold statement this morning during the company's annual FInancial Analyst Meeting. "One of the most exciting things about our cloud strategy is that 70 percent of the wins in the cloud that we had in Q4, ladies and gentlemen, were new Microsoft customers," Tuner told financial analysts. "Yeah, new Microsoft customers. They were IBM Lotus Notes customers, Novell e-mail customers. They were all this other stuff, in addition to the Microsoft customers, that we're actually able to grow our portion of the pie this next year in a very dramatic way, because we can explode worker productivity."

"New" and "customers" are two words not often conjoined at Microsoft. The company's enterprise products are so well established, new sales are usually to existing customers. That Microsoft is adding any new customers from its cloud services is significant. The number Turner stated is staggering, assuming his definition of "new" means a customer who isn't using Microsoft products somewhere else, which is a tough claim for this reporter to believe.

Turner identified cloud computing as one of several "big focus" areas for enterprises. "The first one is around rebooting, retransitioning, replatforming ourselves, if you will, around leading with a cloud with our customers," he said. If you want to go to the cloud, we'll help you do that. We've changed that. I don't believe that was a good move strategically, and it's one I'm personally course correcting on as a direction."

The statement is surprising. In January, I raised concerns that Microsoft's Azure cloud strategy had changed shape -- that the deliverable looks more like a cross between Amazon cloud services and hosted Microsoft applications than the operating system in the sky vision previously outlined by Ray Ozzie, chief software architect. That Turner, who represents the Office and Windows hawks, is presenting the cloud strategy is troubling. What about Ozzie? The cloud had been his baby and the way for Microsoft's reinvention.

Turner FAM 2010 slide

Still there's some sense to Microsoft's approach. Turner used "Access Anywhere" to describe what I've long called "anytime, anywhere, on-anything" computing. Turner's term is more concise but similar concept. Businesses can take control of their information by providing access through hosted services. Employees can benefit from mobile computing without taking precious data outside the firewall on laptops, smartphones and other mobile devices.

"We now have over 10,000 paying customers on our cloud infrastructure platform and that number is continuing to grow every day," Turner said. (By the way, I could not get Microsoft's video plug-in to work in any non-Internet Explorer 8 browser; I've pulled the quotes from the live transcript, which uses a Java plug-in.)

Turner FAM 2010 slide

"Our second big focus for businesses clearly is around the Windows 7 and Office 2010 refresh," Turner told FAM attendees. Microsoft sells nearly 8 copies of Windows 7 a second. "For the first time in a long time, we grew share versus Apple in the United States in laptops per IVC this past year.
Thanks to Windows 7. In fact, we were up 2.7 points against Apple in the United States in laptops." That Turner must even mention Apple says something about how he views the Mac maker competitively. Apple's market capitalization exceeds Microsoft and only a few hundred million in revenue separated the companies during second calendar quarter.

Turner identified several competitors that Microsoft is targeting: Google, IBM, Oracle and VMware. He ended his presentation by returning to the cloud. "Our client software that connects to the cloud and the better our cloud software is the more value that will drive to our on premises client software, and we're going to continue to push on that in a very profound way," he said.

Turner FAM 2010 slide

What that really means: For enterprises, Microsoft is attempting to extend its Office, Windows, Windows Server application stack to cloud services. If businesses buy into Microsoft's cloud, they get the integrated benefits. It's not an open stack.

Turner talked about the future, which is exactly the right approach. As I asserted yesterday, today is about tomorrow -- Microsoft conveying what it will accomplish in the near future rather than what financially happened in the past.

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