Microsoft's Windows 10 OS Debut Takes Back Seat as the Company Focuses on the Cloud and Mobility

Oh, how times have changed for the mighty Microsoft (News - Alert). The company, which debuted its new Windows 10 operating system yesterday, has been steadily shifting its business model away from its flagship operating systems and into the cloud. It’s an entirely necessary migration as the corporate world transitions to an anytime, anywhere way of conducting business and BYOD elevates the status of tablets and phones over the PC.

Fortune magazine recently spoke to Scott Guthrie (News - Alert), who became executive vice president of Microsoft’s cloud and enterprise group in February. Guthrie, a longtime executive, took over when Satya Nadella was promoted from that position to CEO. One of Nadella’s first moves after taking over the company was to make cloud infrastructure and applications a priority. This isn’t surprising, considering revenue from commercial cloud services like its Azure infrastructure platform and Office 365 had grown 147 percent in Microsoft’s most recent earnings report. That works out to an annualized run rate of more than $4.4 billion.

“One of the things that Satya talks about is how we’re living in a mobile-first, cloud-first world,” said Guthrie. ”We’ve been in the process of transforming our business to really embrace that.” Guthrie claims Microsoft is doing three things differently than competitors like IaaS leader AWS to differentiate their cloud offerings. The first is using Azure to provide a global, “hyper-scale” cloud platform. Azure is currently available in 16 regions, each comprised of a cluster of data centers.

“Put in perspective, Amazon has about half that many regions,” said Guthrie. “Google (News - Alert) for their cloud platform only has about a fifth of those regions today. So we actually now have the broadest coverage from a geographic perspective. From a scaling perspective, I think we’re one of [very few] — Amazon and Google being the other two — hyper-scale providers out there that are installing many, many hundreds of thousands or millions of servers every year in our cloud data centers.”

Guthrie added that Microsoft is focusing on delivering enterprise-grade services, including capabilities and support, and is utilizing its extensive experience and market position to deliver that level of service. The company is also unique in that it carries a massive on-premises footprint thanks to existing server software and private cloud offerings. Guthrie said Microsoft is now focusing on helping enterprises and other organizations build hybrid solutions spanning their public cloud and existing private clouds and data centers.

He concedes that Amazon is still the cloud leader and that part of his mission is to gain some of their market share. “I think Amazon was one of the first to really go big in the cloud space,” said Guthrie. “So I think there’s certainly a first mover advantage that they’ve been able to benefit from. I wish we started three years before we did with our own cloud effort. Kudos to them for really embracing it as early as they did.”

Around 57 percent of Fortune 500 companies are using Microsoft Azure, which is certainly a nice chunk of the market. It will be interesting to see if the change in leadership and increasing emphasis on the cloud and mobility as well as Microsoft’s hyper-scale, enterprise-grade approach to the cloud help the company gain additional market traction.