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Monday, 29 March 2010 14:36

Telstra-Microsoft tie up spawns international copycats


Six months into its cloud computing hook-up with Telstra, the president of Microsoft's business division has made clear this is how the software giant will manage SME access to its cloud globally, with similar deals with international telcos now in the wings.

Speaking exclusively with iTWire on his first visit to Australia since joining Microsoft, Stephen Elop said one of the key reasons for the trip was to meet Telstra. 'What we are doing with Telstra in taking advantage of a large and successful telecoms company in a country to help us extend our reach is a strategy for the world.'

Elop added: 'That is a future signpost for how we deal with the extension of the cloud around the world.'

Asked whether Telstra represented a safe sandpit for Microsoft, Elop said that term was misleading as it implied an experiment. 'This is absolutely a leading example of how we want to proceed and yes we are learning a tremendous amount from this, gaining success and traction - but do not imply for a moment it's a casual experiment - it's a primary vector for how we go to market.'

Asked about the importance of the National Broadband Network to both its initiative with Telstra and Microsoft's cloud computing plans, Elop was at his diplomatic best.

'I won't comment on the national network in Australia - but the utility of the network is critically important - two underlines under the word critically.

'One of the reasons for working with Telstra is their expertise and success with networking in Australia. It is the case that what we can achieve with cloud computing is fundamentally constrained by factors like networking.

'One of the key things we worry about is its availability, so investments in that area, particularly as it extends down to higher bandwidths to individual homes and businesses are very, very important.'

With the May/June release of Microsoft Office 2010 and SharePoint 2010, which are presently in beta testing, more Microsoft tools and functionality will be offered through Telstra's T-suite portal.

Telstra and Microsoft first announced their liaison in November 2008, finally launching the first offerings in September 2009, aimed squarely at the SME space. The applications run in Microsoft's cloud, with Telstra managing the access and billing.

Microsoft Australia managing director Tracey Fellows said that customers had signed up from 'tens of seats' to 'hundreds' of seats with a wide range of companies using the service, with professional services companies among the early enthusiasts. However she declined to name any local users of the service.

Current pricing of the Microsoft services sold through T-suite ranges from Office Live Meeting costing $7.45 per licence per month;  Office Communications online from $3.95 per licence per month; up to tools such as Microsoft Dynamics CRM with 30Gb of storage which costs $109.95 per user per month.

Elop who met with many local business users as well as Telstra on his visit to Australia said that cloud computing was top of mind with many. (This may come as a surprise to technology analyst Gartner which last week issued the results of its CIO survey which suggested cloud computing wasn't at the pointy end of Australian CIOs' to-do list).

Even so according to Elop; 'The world cloud was discussed with every single meeting I had with every single customer - it's top of mind and leading topic of conversation. Almost without exception they are saying 'we understand there is this concept, we want to learn more and what the potential impact is on our business'.'

Enterprises were also wondering, he acknowledged, how to deal with the broad range of regulatory and legislative regimes which may influence where they keep their data. Australian users of the Microsoft cloud services will find their applications and data hosted mainly in the company's Singapore data centre, according to Fellows.

According to Elop, at present; 'A lot of what is happening is customers making decisions to take email or collaboration infrastructure into the cloud. Why are they doing that? First and foremost they look at reducing costs.

'We can run those products at much larger scale and hence much lower cost than a typical customer is able to do. They are also looking to get out of the challenges of maintaining the software, because they know we can do it at scale faster and more efficiently than they can.

'They are very interested in making sure their IT resources are focussed on things in their enterprise that will differentiate them and better compete. Email is essential but not necessarily providing competitive differentiation for them.'

Elop has a good understanding of enterprise level issues having joined Microsoft a little over two years ago from Juniper Networks where he had been chief operating officer. He had previously been CEO of MacroMedia before it was acquired by Adobe, where Elop went on to become president.

At present most of the Microsoft applications available via Telstra's T-Suite are communications or collaboration focussed. Elop said that as Office 2010 and SharePoint 2010 rolled out, part of the core functionality of the products would be available in the cloud, and Australia would be at the leading edge of deployment of those service capabilities.

'A lot of work is being done so they are well connected with the cloud. If you are working in Word you can save on PC, or save up into the cloud just as easily.'

Elop said that a browser based version of the products would also be available.

Asked whether this was another response to Google apps, Elop dismissed the Google tools as 'a capability that allows very simple editing. Our relationship with the customers and definition of productivity is much broader. Word processing and spreadsheets are important - but also a sweeping collection of collaboration capabilities.'

Asked about future plans for products aimed at business users, Elop explained that to keep Microsoft's development objectives on track the company defined what it refers to as its 'North Star' which is; 'A very deliberate sense of what we think the future holds. Focus on that North Star is important because when you have thousands of people working on this all over the world you want people to understand that distant vision so every little decision they take is a little bit biased - and that will eventually take you there.'

As to the locus of the North Star, Elop pointed to three key issues: expression, connections and insight.

'One key pillar is expression - how do people express themselves to technology and how is information and data expressed back to that person? We believe this is an area that will be rapidly changing in the years ahead. An example of this is the natural user interfaces such as Microsoft Surface or speech recognition.

'You've probably seen in the gaming division tools that are able to interpret gesture and facial recognition. That has a great role in gaming, and in productivity as well.

'Imagine that meeting room wall where I want to highlight something and I use a gesture to do it without getting out of my seat. Keyboards and mice are great - but are also barriers between what you want to do.'

Elop explained that for Microsoft; 'The other major pillar is about seamlessly and securely connecting people. Bringing people together across culture, distance and language and letting them connect - good examples with IM, presence, voice, chat, video telepresence - these are all area of current investment.

'But that will extend - to bring together the context of a person. In Outlook 2010 I can see the current presence of the people with who I interact. Another example in Outlook 2010 is the social connector,' which seems to deliver similar functionality to that currently offered of Outlook users by Xobni.

'And then there is insight - to what degree can the technology make you more productive?' The holy grail for Microsoft is to; 'Take away the requirement to manually search for things, but instead (for the system to) see what I am trying to accomplish, detect my intent, work out everything I need. find it, present it, collate it and synthesise it into something that I can use.

'If I were to show you materials we have prepared that imagine the world ten years from now those would be three principal themes of that,' said Elop.

'Fundamentally our job as a division is to help customers become more productive. Even though irrational exuberance and crashes, over the long term the growth in the economy and quality of our lives comes from improved productivity - the steam engine, the automobile, printing press, computer, Office 2010 - that's what we are focussed on.'


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