At Microsoft’s Ignite conference, the company unveiled its latest cloud product, dubbed Azure Arc. The product will enable Microsoft customers to run Azure services and management tools inside their own data center or in another cloud, including that of rivals like Amazon Web Services (AWS) or Google Cloud.
Microsoft’s latest solution is just one of the many announced at its annual conference, which had something of a theme: Microsoft wants to bolster the appeal of its cloud services — especially its hybrid offering — as it fights for share in a market dominated by AWS. As of April 2019, AWS leads the general cloud market with a market share of 32%, while Azure has 17% and Google trails with 10%.
Arc’s cross-platform abilities should appeal to the multicloud and hybrid cloud needs of enterprise clients. The vast majority (84%) of enterprises plan to follow a multicloud strategy, with 58% pursuing hybrid cloud strategies that include a mix of on-premises and off-premises computing that can leverage one or multiple clouds, according to Flexera. Using multiple cloud vendors allows companies to balance a range of priorities, like security, cost, or processing speeds, by selecting the best vendor or equipment for the task.
The move signals a shift in Microsoft’s cloud strategy as it lets up on its ambitions to become a sole provider and pushes into hybrid solutions. Previously, Microsoft’s hybrid cloud strategy was focused on selling its Azure Stack to be run on a selection of certified servers.
In this latest release, which is part of what Microsoft is calling Hybrid 2.0, the company is instead positioning itself as the orchestrator of hybrid solutions. This will enable the company to still secure contracts with companies already working with one of Microsoft’s competitors who have a specific need for which it can supply a solution. Providing the connective tissue between various cloud computing resources can make Microsoft a core cloud partner and win it incremental revenue that might have otherwise have gone to competitors.
Microsoft’s rivals have also looked to introduce hybrid solutions, but they appear to be more focused on alternative strategies for uptake than a pivot away from being sole providers. AWS seems to be leaning on its clout as the market leader and scalability to be an enterprise’s sole cloud solution provider.
Google is pursuing a sales-centric approach to the cloud market by investing in its sales department to win new deals: In November 2018, Google Cloud hired a new CEO with a background in sales; and in August 2019, it switched up its commission model to provide new incentives and weed out underperformers. Targeting cross-cloud services can allow Microsoft to better capitalize on the growing global cloud market, which generated $80.4 billion in 2018, up from $54.9 billion the year prior, according to Canalys.
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