Microsoft Cloud Exec Says Azure Is Putting the Squeeze on Amazon

Growing use of the Microsoft Azure cloud service, rapidly expanding features and a price war are putting the squeeze on cloud market leader Amazon Web Services, according to Microsoft Technical Fellow in the Cloud and Enterprise Division Mark Russinovich.

In the opening keynote at the TechMentor conference at the Microsoft Conference Center on the company's Redmond campus, Russinovich showcased the edge Microsoft sees that it has over its key rival.  Russinovich argued that the company's squeeze contributed to Amazon's disappointing quarterly earnings report last month, which rattled investors.  "Amazon Web Services is struggling in the face of pricing pressure by us and Google," Russinovich said. "People are starting to realize we're in it to win."

Indeed, market researchers last month pointed to Microsoft and IBM as those who are gaining the most ground on Amazon in the public cloud. When asked how many TechMentor attendees have logged into the Microsoft Azure Portal, only about one-quarter of the IT pros in the audience said they have. Disclosure: TechMentor, like Redmond magazine, is produced by 1105 Media.

Pointing to the growth of Azure, Russinovich showcased some recently released figures. The service hosts 300,000 active Web sites and 1 million active database services. The Azure Storage service has just surpassed 30 trillion objects with 3 million active requests per second at peak times. Russinovich also said that 57 percent of the Fortune 500 companies are using Azure. And Azure Active Directory, which organizations can federate with their on-premises versions of Active Directory, now has 300 million accounts and 13 billion authentication requests per week.

Russinovich emphasized Microsoft's advantage with Azure Active Directory and the cloud service's emphasis on identity. "Azure Active Directory is the center of our universe," Russinovich said. "When you take a look at all the places where you need identity, whether it's a [third-party] SaaS service or whether Microsoft's own, like Office 365, you look at custom line-of-business apps that enterprises are developing and they want to integrate their own identity services."

Throughout his talk, Russinovich emphasized Microsoft's focus on its hybrid cloud delivery model and the security layers that can extend to the public Azure cloud. To that point, Azure Active Directory's role in supporting hybrid clouds is "it supports ways you can foist identities to the cloud so that they're accessible from all of these targets, line-of-business apps in the cloud and Microsoft's own cloud platforms."

The primary way to achieve that is to federate an Azure Active Directory tenant with an on-premises Active Directory service, he said. "What that means is when someone goes and authenticates, they get pointed at Azure Active Directory in the cloud. Their identities are already there and the authentication flow goes to an Active Directory federated server on-premises that verifies the password and produces the token."  It uses OAuth 2.0 for authentication, he said.

Microsoft plans to integrate OAuth 2.0 into Windows Server and all Azure services, though Russinovich noted it supports other token services such as SAML and other identity services from the likes of Facebook, Google and others.

One area Microsoft needs to deliver on for Azure is role-based access control, which is in preview now, Russinovich said. "This will be fleshed out so we have a consistent authorization story all pointing to Azure Active Directory, which lets you not just connect on-premises to Active Directory through [Active Directory Federation Services], but these third-party consumer services, as well. That's a key point, you want identity to be enabled in the cloud," he said.

Another key area of leadership Microsoft has gained in the cloud is the company's defiance in giving in to law enforcement agency efforts to subpoena user data, alluding to last week's order to turn over data in a Dublin datacenter, which Microsoft said it will appeal. "Brad Smith, our head of legal, is probably now the face of the tech industry going out and fighting the United States government's efforts to get access to data that they probably won't get access to," he said. "We're really trying to make sure we're a great partner for customers that care about data privacy."

When it comes to the public cloud, Russinovich discussed how there's significant demand for cloud services such as storage and disaster recovery. Russinovich demonstrated a few offerings including the new Azure ExpressRoute, which through third-party ISPs and colocation operators, can provide high-speed dedicated private connections between two datacenters using Azure as a bridge or to connect directly to Azure. Other demos included point-to-site VPN and Web apps using Azure.

Russinovich also gave a nod to Azure's broad support for those who want to create Windows PowerShell scripts to add more automation. "Everything in Azure is PowerShell-enabled because Jeffrey Snover [its revered inventor and Microsoft distinguished engineer and lead architect] makes us enable everything from PowerShell," Russinovich quipped.

During the evening reception at TechMentor, I reconnected with some attendees who had told me the previous evening they wanted to learn more about Azure. Some saw opportunities, but others weren't sure how it fits into what they're doing. Nevertheless, most said they were surprised to learn how Azure has advanced. This is exactly what Russinovich aimed to do in his talk -- to make a case that Microsoft has more to offer than Amazon and other cloud providers.

To be sure, Amazon still has a growing cloud business and is seen as the leader for enterprise Infrastructure as a Service. As noted by investment researcher Zacks, Amazon reported  a 90 percent usage growth for its AWS cloud business. While Amazon doesn't break out revenues and profits for AWS, it falls in the category of "Other," now accounting for 6 percent of revenues. Experts believe AWS generated the majority of revenues in that "Other" category.

"AWS continues to launch new services and enhance the security of its services," according to the Zacks report. "Amazon again reduced prices significantly, which was the reason for the revenue decline in the last quarter."

By all indications here at TechMentor and messaging from Microsoft at the recent Worldwide Partner Conference (and TechEd before that), Microsoft is not letting up on its Azure push. While many attendees saw the depth and progress Microsoft has made with Azure for the first time, Rome wasn't built in a day.

Posted by Jeffrey Schwartz on 08/13/2014 at 11:34 AM