Ballmer Foresees All-Public-Cloud World

Microsoft CEO Steve Ballmer

Microsoft CEO Steve Ballmer

It might take some time – perhaps as long as two decades – but ultimately, all businesses will move towards public cloud services instead of software purchases, Microsoft CEO Steve Ballmer told 15,000-plus of the company’s partners kicking off Microsoft Worldwide Partner Conference in Houston Monday.

That belief is driving the agenda for Microsoft, which is in the midst of transforming itself from a software company to a devices and services company, and for its partner engagements, where it’s opening more of its cloud services to more of its partners in the way most want access to it.

“At the end of the day, the path to the cloud, whether it takes 5, 10, 15, 20 years, leads almost all companies to the public cloud,” Ballmer told attendees.

Its partners are on their way too – at least its top partners. A Microsoft-commissioned study by IDC announced at the conference noted that cloud-oriented partners are the top performers in terms of revenue per employee, gross profit, customer acquisition and growth in the Microsoft partner ecosystem.

Microsoft’s advantage, Ballmer told attendees, is that it’s the one of the few companies with experience building massive scale cloud infrastructures, the types its rolled out first in support of its own Bing search service and later in support of its Azure cloud platform. And Ballmer said Microsoft is the only one in that elusive club that’s also investing in the tools and infrastructure to build private clouds and connect private and public clouds to produce hybrid cloud offerings. IDC’s study on behalf of Microsoft notes that 74 percent of customers want their cloud service provider to also be able to offer comparable on-premise expertise, supporting Ballmer’s hypothesis that hybrid cloud is the winner today.

“We are the only solution, and certainly the best solution, for customer who want [single vendor for public and private cloud offerings],” Ballmer said.

Office 365 Open Expansion

Given its focus on it over the last two years, it’s no surprise that Ballmer proclaimed the company’s Office 365 cloud-based collaboration and productivity suite as the company’s latest business to cross the billion-dollar threshold. When it was first introduced to channel partners, many partners balked at terms and conditions around the offering, which limited partners to playing essentially an agent role on sales, and ensured that Microsoft and Microsoft alone owned the billing relationship with customers. After substantial complaints from most sectors of its channel community, Microsoft relented, allowing partners to maintain the billing relationship with customers on select SKUs of Office 365 through the Office 365 Open program, introduced at last year’s WPC in Toronto.

This year, channel chief Jon Roskill announced that additional Office 365 SKUs, including Professional Plus, Government, and Academic will now be available via Office 365 Open, meaning that partners can maintain customer control on a much greater number of Office 365 deals. The company will also introduce for partners what Roskill called “transition SKUs” for Office 365 for companies that are on one type of subscription to the service, but wish to move to higher levels of Office.

Additionally, Tammi Reller, Microsoft CFO and CMO for Windows, announced the company would invest an additional $100 million in channel enablement over the course of its just-started fiscal 2014.

“Where we’re heading with Office 365 presents even more opportunities,” she said. “We want you, and we need you, to lead.”

Growing Out of Software

Ballmer told partners that the shift from a pure software company to a devices and services company is necessary due to changes in the way people data and applications. While the bombastic CEO said he still believes that software development “is the most valuable skill that anybody on the planet can possibly have,” software as an isolated entity is no longer the way to go because software is being consumed on a wider number of devices than ever before, and is being powered more and more by cloud services on the back end. Microsoft has already defined the experience on one iconic device, the PC, he told attendees, and it will work to define the experience on a variety of new sets of devices. This, he said, is Microsoft’s new raison d’etre.

“We think we understand the tools and technologies it takes to get work done better than anyone on the planet. Whether you’re an employee, a customer or partner, or a developer, we build the experiences that let you get stuff done,” he said. “We will deliver the devices and services that bring things alive when people want to be productive.”