Microsoft Corporation recently announced revenue of $26.5B for the quarter ending December 31, 2014. Devices and Consumer revenue constituted $12.9B while Commercial revenue, spanning cloud revenues, server products and Windows licensing grew 5% to $13.3B. Of the $26.5B in quarterly revenue, commercial cloud revenue grew to an annualized revenue run rate of $5.5B driven largely by sales of the cloud-based Office 365 product, Azure and Dynamics CRM Online. Office 365 subscribers increased to 9.2 million, search-based advertising revenue grew 23% and sales of Xbox consoles and phone-based Lumia units reached 6.6M and 10.5M respectively. Microsoft’s commercial cloud revenue projections of $5.5B indicate that its cloud revenues are increasingly competitive with Amazon, which reported revenue of $5.6B in the “Other” category for the most recent fiscal year, the vast majority of which belongs to Amazon Web Services.
This week, Microsoft announced enhancements to its encryption offerings for Outlook.com, Office 365, Azure and OneDrive. Specifically, Outlook.com is now protected by Transport Layer Security that delivers encryption support for inbound and outbound email. In addition, Microsoft has shored up its encryption capabilities in Office 365 with reference to its cloud-based platform for encrypted email messaging. Moreover, Microsoft noted that it had strengthened its encryption functionality for Azure ExpressRoute, the infrastructure that provides a direct connection to the Azure platform that bypasses the public internet. In other news, OneDrive now supports Perfect Forward Secrecy (PFS) which uses a different encryption key for each connection, rendering it more difficult for cyberattackers to decrypt connections to OneDrive. Finally, Microsoft also announced the opening of a Microsoft Transparency Center on its Redmond, WA campus that allows governments to examine the source code for its key products in order to confirm the security capabilities of Microsoft’s portfolio, particularly in the wake of international concerns about cybersecurity and espionage in the post-Snowden era.
Almost as if in response to the Amazon Fire Phone’s announcement of unlimited cloud photo storage, Microsoft announced an aggressive expansion of the limits for its cloud-based storage offerings by increasing the free quota for OneDrive from 7 GB to 15 GB on Monday. In addition, Microsoft announced that all Office 365 subscriptions will include 1 TB of cloud storage. Finally, Microsoft reduced storage prices for cloud storage independent of an Office 365 subscription by 70% such that monthly prices for 100 GB of storage are now $1.99 as opposed to $7.49 and 200 GB are $3.99 instead of $11.49. Microsoft’s pricing of free storage represents an astute move to continue its aggressive rollout of Office 365 by shifting customers to its cloud-based productivity suite in contrast to the client-based installations via download or DVD. Moreover, Microsoft continues to tout the possibilities for collaboration enabled by the cloud and as such, users are likely to see enriched collaboration functionality coming to the Office 365 suite soon. Microsoft CEO Satya Nadella underscored the importance of the connection between the cloud and collaboration in a blog post by noting that “the cloud is enabling a world where you can walk up to any supported device, sign in, collaborate, communicate and share your creations with the world. Doesn’t matter what you make, where you make it or what device you use. The cloud is there to help.” Whereas Steve Jobs introduced iCloud primarily in the context of device synchronization, and the resulting operational simplicity specific to accessing the same version of every file and folder from every machine, Nadella appears to be taking things one step further by positioning the cloud as a platform fundamentally for collaboration, communication and sharing.
Microsoft To Expand Options Related To Geography Of Online Data Storage Given NSA-related Privacy Concerns
Given recent concerns about the security of online data related to allegations of NSA spying, Microsoft is putting its stake in the ground by noting it will take additional measures to allow customers to store cloud-based data in data centers that reside in nations of their choosing. Microsoft’s general counsel, Brad Smith, noted that “people should have the ability to know whether their data…are being subject to laws in some other country and should have the ability to make an informed choice of where their data resides.” As noted in The New York Times, Microsoft’s option of allowing customers where to store their data for select applications such as Office 365, Dynamic CRM Online and Windows Azure predates Snowden’s revelations about NSA spying. But in an interview with The Financial Times, Microsoft’s Brad Smith indicated the company would be expanding the range of options available to customers with respect to data storage as it relates to national and regional boundaries. Details of Microsoft’s plans to enhance online data storage options remain scant, so we should expect to hear more from the Seattle tech behemoth in the days to come. For now, however, Microsoft’s decision to support options for data storage outside of the NSA’s purview raises a constellation of legal and philosophical questions about the rights of data owners to selectively store data transnationally in ways analogous to the debate about the legality of foreign-held Swiss bank accounts that are immune to certain fiduciary regulations, for example.
Microsoft announced plans to support an open-source version of Java on both its Windows Azure IaaS and PaaS platforms at last week’s O’Reilly Open Source Convention in Portland, Oregon. Microsoft will offer the Java Standard Edition (Java SE) and will work with Azul Systems to “build, certify and distribute a compliant OpenJDK-based distribution meeting the Java SE specification for use with Windows Server environments on Azure.” Azul will collaborate with Microsoft’s wholly-owned subsidiary Microsoft Open Technologies to develop the new OpenJDK in an effort that will focus largely on compliance, standards and specifications given Microsoft’s experience of being sued by Sun Microsystems for developing a non-compliant version of Java. Sunnyvale, CA-based Azul Systems is an experienced provider of Java runtime to enterprises that specializes in optimizing enterprise usage of Java by improving performance, scalability, latency, response times and consistency. Azul will license the OpenJDK on Azure under a GNU General Public License (GPL) version 2 and certify it for compliance with Java SE.
Microsoft’s support of Java on its Azure platform comes in the wake of a partnership announced in June whereby Oracle software such as Java will be certified and supported by Oracle to run on the Azure platform and Microsoft’s Hyper-V virtualization technology.
This was the week where Microsoft announced the general availability of Windows Azure Infrastructure as a Service. More than a simple declaration of production-grade availability, Microsoft’s announcement about its IaaS platform delivered the strongest possible elaboration of its intent to compete head to head with Amazon Web Services in the IaaS space to date. In a blog post, Microsoft’s Bill Hilf accurately assessed enterprise readiness with respect to cloud adoption by noting that customers are not interested in replacing traditional data centers with cloud based environments. Customers typically want to supplement existing data infrastructures with IaaS and PaaS installations alongside private cloud environments and traditional data center ecosystems. In other words, hybridity is the name of the game with respect to enterprise cloud adoption at present, and Hilf’s argument is that no one is better suited to recognize and respond to that hybridity than Microsoft. In conjunction with the general availability of its Azure IaaS platform, Microsoft pledges a commitment to “match Amazon Web Services prices for commodity services such as compute, storage and bandwidth” alongside “monthly SLAs that are among the industry’s highest.”
Microsoft also announced new, larger Virtual Machine sizes on the order of 28GB/4 core and 56 GB/8 core in addition to new Virtual Machine image templates featuring a gallery of image templates including Windows Server 2012, Windows Server 2008 R2, SQL Server, BizTalk Server and SharePoint Server as well as VM templates for applications that run on Ubuntu, CentOS, and SUSE Linux distributions. Overall, the announcement represents an incisive and undisguised assault on the market dominance of Amazon Web Services within the IaaS space that is all the more threatening given Microsoft’s ability to match AWS in price, functionality and service. The key question now is the degree to which OpenStack and Google’s Google Compute Engine (GCE) will emerge as major players within the IaaS space. OpenStack has already emerged as a major IaaS player, but it remains to be seen which distribution will take the cake at the enterprise level. Nevertheless, analysts should expect a tangible reconfiguration of IaaS market share by the end of 2013, with a more significant transformation in place roughly a year from the release in general availability of Google’s Compute Engine, which was released in Beta in June 2012.
From December 28 to December 30, Microsoft’s Windows Azure platform experienced an outage for its South Central US Region that arrived head upon heels after the Amazon Web Services Christmas eve outage that became famous for incapacitating Netflix. The outage was first reported by Microsoft at 3:16 PM UTC on December 28 with the news that a networking issue was “partially affecting the availability of Storage service in the South Central US subregion” on its Windows Azure Service Dashboard. Hours later, Microsoft noted that the outage was affecting the ability to display the status of service for all other regions, even though service itself was unaffected outside the South Central US Region.
The first substantial elaboration on the cause of the outage came six hours after the disclosure of the outage at December 28, 9:16 PM UTC:
The repair steps are taking longer because it involves recovery of some faulty nodes on the impacted cluster. We expect this activity to take a few more hours. Further updates will be published after the recovery is complete. We apologize for any inconvenience this causes our customers. Note: The availability is unaffected for all other services and sub-regions. We are currently unable to display the status of the individual services and sub-regions due to the above mentioned issue.
Here, Microsoft specifies that the root cause of the problem consisted of “faulty nodes on the impacted cluster,” and that repair would be complete within a few hours. But 9 hours after this specification—or within 15 hours of the initial announcement—the Azure team announced that the problems which affected the recovery of the affected nodes was “likely to take a significant amount of time.” The impact on the creation of new VM jobs and Service Management operations had been addressed, in the meantime, but the full and complete recovery of the cluster would take more time.
On December 30, 9:00 PM UTC, the Azure team reported:
The repair steps are still underway to restore full availability of Storage service in the South Central US sub-region. Windows Azure provides asynchronous geo replication of Blob & Table data between data centers, but does not currently support geo-replication for Queue data or failover per Storage account. If a failover were to occur, it would impact all accounts on the affected Storage cluster, resulting in loss of Queue data and some recent Blob & Table data. To prevent this risk to customer data and applications, we are focusing on bringing the affected stamp back to full recovery in a healthy state. We continue to work to resolve this issue at the earliest and our next update will be before 6PM PST on 12/30/2012. Please contact Windows Azure Technical support for assistance. We apologize for any inconvenience this causes our customers.
With this announcement, impacted customers finally learn of the real root cause of the outage: the Azure platform currently fails to support georeplication for storage failover data and queue data. A failover such as the one experienced by affected clusters therefore results both in the loss of queue data as well as “recent Blob & Table data,” leading to a longer time to recover the faulty nodes on the affected cluster. Georeplication, recall, refers to the practice of maintaining replicas of customer data in locations that are hundreds of miles of apart in order to more effectively protect customers against data center outages. Azure Storage’s lack of support for georeplication of failover and queue data, however, led to the prolongation of the December 2012 outage.
The problem was finally, fully resolved at 10:16 AM UTC, December 31, 2012:
Storage is fully functional in the South Central US sub-region All customers should have access to their data. We apologize for any inconvenience this caused our customers.
Notable about the Microsoft Azure outage was its relative lack of media coverage in comparison to the Amazon Web Services outage, which lasted roughly 24 hours in comparison to 77 hours for the Azure outage. Granted, the Amazon Web Services outage affected Netflix, one of the IaaS industry’s most prominent customers alongside Zynga, but the contrast between the coverage accorded to each of these platforms illustrates the market dominance of Amazon Web Services as measured by the way in which its outages affect measurably more customers and end-users than other IaaS platforms. Another factor accounting for the relative disparity in media coverage between the AWS and Azure outages is AWS’s trademark painstaking post-mortem analysis of outages that Microsoft and all other vendors would do well to match in depth and specificity, going forward.