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While many solution providers ranked Microsoft’s cloud computing effort as their top concern in a recent survey, some IT solution providers are taking a positive but cautious approach to Microsoft’s new Azure platform, which puts computing power in the cloud for end-user businesses.

The technology enabled by Microsoft Azure, which will be hosted on Dell equipment at a giant data center in Texas, will allow solution providers who are doing custom development to be able to offer hosting for those services. That makes it possible for small businesses to gain the benefits of custom developed applications that used to only be available to enterprises, according to Marc Harrison, president of Silicon East, a New Jersey-based solution provider.

Harrison’s company received a 10-minute video from Microsoft about the new offering.

“For me this is pretty exciting,” he says. “We’ve been doing more and more custom software development for smaller clients. But small businesses can’t afford in-house infrastructure to host custom-developed software. The combination of Azure with inexpensive software development really empowers small businesses to level the playing field.”

Harrison outsources some of that development—mostly database development—to contractors in India.

Silicon East also serves as a managed service provider and offers SAAS (software as a service) through non-Microsoft providers. His company did not move to Microsoft’s hosted Microsoft Exchange or SharePoint when the software giant made that service available earlier this year.

“This is a Microsoft-branded service,” he says. “That’s good because it’s a well-recognized and trusted brand. On the other hand, it’s Microsoft who is billing our customers and giving us a share on the back end, rather than us billing customers. I much prefer that we do the billing.”  Silicon East offers these services on a private label basis to end customers.

“That’s the question and concern—who owns the customer?” he says.

Harrison says it’s still unclear how Azure will be structured to work with the channel, but the sense is that Microsoft will sell direct to the large enterprise and leave the SMB space to its channel partners.

Harrison also expresses concern about the Microsoft Azure relationship with Dell because he believes Dell is still working out the kinks in how it deals with solution providers.

“We are very concerned that if we refer any of our hardware business to Dell that Dell will shortly thereafter try to directly sell that customer managed services contract,” he says.  Dell recently took its direct managed services offering to the New York metropolitan area, where Silicon East has customers. Dell has said that it will refrain from offering its direct managed services to end customers if there is a Dell certified managed services partner who already owns that business.

The I.T. Pros, a certified Dell managed services partner and a Microsoft Gold partner, says Microsoft’s entry into the cloud space will bring critical mass to the market.

“They certainly aren’t first to market with a cloud, but their endorsement of cloud computing will shift the initiative into high gear,” says Doug Ford, president of The I.T. Pros, a San Diego-based managed services provider. “The I.T. Pros piloted our own cloud environment earlier this year and are currently hosting customers on it.

“We view Microsoft’s Azure cloud as an opportunity to expand our service offering and plan to leverage our Gold Partner status with Microsoft to jump on the Azure bandwagon early, so we are fully engaged and ready to support it when Microsoft brings the offering to market in full swing,” he says.

But Ford admits the company will hedge its bets and look at several cloud initiatives.

“To stay true to our core values of ‘Innovation’ and ‘Integrity,’ we are also researching other cloud options, including Amazon’s young EC2 cloud, Terremark’s mature on-demand cloud, and we will continue to spend time, effort and money to build out and sell services on our own cloud solution.”