Microsoft Expands Online Services Globally

Microsoft is making a major push in online services, expanding the availability of cloud-based versions of popular business applications such as Exchange, SharePoint and Live Meeting globally and increasing its data center capacity through a partnership with Hewlett-Packard’s EDS services division.

More than 4,000 solution providers are registered to sell Microsoft Online applications, and until today these services were only available in 19 countries. The partnership with EDS will provide Microsoft with access to data centers in local markets, pushing Microsoft Online delivery to local customers and keeping data within local geographies.

“EDS will host some of the assets, especially where Microsoft doesn’t have data centers,” says Ron Markezich, corporate vice president of Microsoft Online Services. “This will allow Microsoft to grow its data center footprint around the globe much faster.”

The EDS partnership will make it much easier for Microsoft to deliver software services to customers and U.S. subsidiaries operating in countries that require business data remain in country.

Since Microsoft launched on its cloud computing push more than two years ago, industry observers and analysts have speculated that the software giant built on the sales of on-premise operating systems and applications didn’t have the data center capacity to service even the U.S. market on a large scale.

In the last three years, Microsoft has embarked on a massive data center expansion program, building huge facilities in Washington, Oregon, Russia and other locations around the globe. Some analysts even speculated that Microsoft’s on-again, off-again love affair with Yahoo was more about data center capacity than search engine marketing.

Markezich says Microsoft has more than enough data center capacity to meet its current and future cloud computing service demands. The relationship with EDS is more about gaining access to data centers in countries where Microsoft currently doesn’t have a presence.

While Microsoft has more than 4,000 partners reselling its online applications, HP’s EDS division enjoys a special status in this cloud computing ecosystem.

As part of its alliance, EDS is integrating Microsoft Online applications into its infrastructure and product portfolio. EDS will resell Microsoft cloud applications plus integration and maintenance services to enterprises. Over the next five years, EDS estimated the sale of Microsoft Online services and associated support services will generate more than $3 billion in revenue. 

“We’re seeing a significant amount of interest from prospects in these services,” says Kevin Torgerson senior vice president of Service Delivery Operations at EDS.

Microsoft is also standardizing its online applications on the HP hardware platform, which will make integration, maintenance and future application development easier and optimize performance, Markezich says.

In addition to EDS, Microsoft also signed Accenture and Avanade as partners for the sale and delivery of Microsoft Online applications.

Microsoft’s “Software+Services” cloud computing strategy presumes that end users will not abandon their on-premise applications, and opt for a mix of on-premise and hosted solutions. For online versions of its applications, Microsoft pays resellers 12 percent commission on the initial sale, plus a 6 percent annual annuity.

As part of the global expansion, Microsoft is offering a 25 discount on the Business Productivity Online Suite through June.