Category Archives: cloud computing

cloud computing, microsoft, professional

Microsoft at Ignite: Building on Office 365, getting more like Google, Adobe mysteries and FPGA magic

September 28, 2016 onlyconnect

I’m just back from Microsoft’s Ignite event in Atlanta, Georgia, where around 23,000 attendees mostly in IT admin roles assembled to learn about the company’s platform.

There are always many different aspects to this type of event. The keynotes (there were two) are for news and marketing hype, while there is lots of solid technical content in the sessions, of which of course you can only attend a small fraction. There was also an impressive Expo at Ignite, well supported both by third parties and by Microsoft, though getting to it was a long walk and I fear some will never find it. If you go to one of these events, I recommend the Microsoft stands because there are normally some core team members hanging around each one and you can get excellent answers to questions as well as a chance to give them some feedback.

The high level story from Ignite is that the company is doing OK. The event was sold out and Corporate VP Brad Anderson assured me that many more tickets could have been sold, had the venue been bigger. The vibe was positive and it looks like Microsoft’s cloud transition is working, despite having to compete with Amazon on IaaS (Infrastructure as a service) and with Google on productivity and collaboration.

My theory here is that Microsoft’s cloud advantage is based on Office 365, of which the core product is hosted Exchange and the Office suite of applications licensed by subscription. The dominance of Exchange in business made the switch to Office 365 the obvious solution for many companies; as I noted in 2011, the reality is that many organisations are not ready to give up Word and Excel, Outlook and Active Directory. The move away from on-premises Exchange is also compelling, since running your own mail server is no fun, and at the small business end Microsoft has made it an expensive option following the demise of Small Business Server. Microsoft has also made Office 365 the best value option for businesses licensing desktop Office; in fact, I spoke to one attendee who is purchasing a large volume of Office 365 licenses purely for this reason, while still running Exchange on-premises. Office 365 lets users install Office on up to 5 PCs, Macs and mobile devices.

Office 365 is only the starting point of course. Once users are on Office 365 they are also on Azure Active Directory, which becomes a hugely useful single sign-on for cloud applications. Microsoft is now building a sophisticated security story around Azure AD. The company can also take advantage of the Office 365 customer base to sell related cloud services such as Dynamics CRM online. Integrating with Office 365 and/or Azure AD has also become a great opportunity for developers. If I had any kind of cloud-delivered business application, I would be working hard to get it into the Office Store and try to win a place on the newly refreshed Office App Launcher.

Office 365 users have had to put up with a certain amount of pain, mainly around the interaction between SharePoint online/OneDrive for Business and their local PC. There are signs that this is improving, and a key announcement made at Ignite by Jeff Teper is that SharePoint (which includes Team Sites) will be supported by the new generation sync client, which I hope means goodbye to the ever-problematic Groove client and a bit less confusion over competing OneDrive icons in the notification area.

A quick shout-out too for SharePoint Groups, despite its confusing name (how many different kinds of groups are there in Office 365?). Groups are ad-hoc collections of users which you set up for a project, department or role. Groups then have an automatic email distribution list, shared inbox, calendar, file library, OneNote notebook (a kind of Wiki) and a planning tool. Nothing you could not set up before, but packaged in a way that is easy to grasp. I was told that usage is soaring which does not surprise me.

I do not mean to diminish the importance of Azure, the cloud platform. Despite a few embarrassing outages, Microsoft has evolved the features of the service rapidly as well as building the necessary global infrastructure to support it. At Ignite, there were several announcements including new, more powerful virtual machines, IPv6 support, general availability of Azure DNS, faster networking up to an amazing 25 Gbps powered by FPGAs, and the public preview of a Web Application Firewall; the details are here:

My overall take on Azure? Microsoft has the physical infrastructure to compete with AWS though Amazon’s service is amazing, reliable and I suspect can be cheaper bearing in mind Amazon’s clever pricing options and lower price for application services like database management, message queuing, and so on. If you want to run Windows server and SQL server in the cloud Azure will likely be better value. Value is not everything though, and Microsoft has done a great job on making Azure accessible; with a developer hat on I love how easy it is to fire up VMs or deploy web applications via Visual Studio. Microsoft of course is busy building hooks to Azure into its products so that if you have System Center on-premises, for example, you will be constantly pushed towards Azure services (though note that the company has also added support for other public clouds in places).

There are some distinctive features in Microsoft’s cloud platform, not least the forthcoming Azure Stack, private cloud as an appliance.

I put “getting more like Google” in my headline, why is that? A couple of reasons. One is that CEO Satya Nadella focused his keynote on artificial intelligence (AI), which he described as “the ability to reason over large amounts of data and convert that into intelligence,” and then, “How we infuse every application, Cortana, Office 365, Dynamics 365 with intelligence.” He went on to describe Cortana (that personal agent that gets a bit in the way in Windows 10) as “the third run time … it’s what helps mediate the human computer interaction.” Cortana, he added, “knows you deeply. It knows your context, your family, your work. It knows the world. It is unbounded. In other words, it’s about you, it’s not about any one device. It goes wherever you go.”

I have heard this kind of speech before, but from Google’s Eric Schmidt rather than from Microsoft. While on the consumer side Google is better at making this work, there is an opportunity in a business context for Microsoft based on Office 365 and perhaps the forthcoming LinkedIn acquisition; but clearly both companies are going down the track of mining data in order to deliver more helpful and customized experiences.

It is also noticeable that Office 365 is now delivering increasing numbers of features that cannot be replicated on-premises, or that may come to on-premises one day but Office 365 users get them first. Further, Microsoft is putting significant effort into improving the in-browser experience, rather than pushing users towards Windows applications as you might have expected a few years back. It is cloud customers who are now getting the best from Microsoft.

While Microsoft is getting more like Google, I do not mean to say that it is like Google. The business model is different, with Microsoft’s based on paid licenses versus Google’s primarily advertising model. Microsoft straddles cloud and on-premises whereas Google has something close to a pure cloud play – there is Android, but that drives advertising and cloud services rather than being a profit centre in itself. And so on.

There were a couple more notable events during Nadella’s keynote.

Distinguished Engineer Doug Burger and one of Microsoft’s custom FPGA boards.

One was Distinguished Engineer Doug Burger’s demonstration of the power of FPGA boards which have been added to Azure servers, sitting between the servers and the network so they can operate in part independently from their hosts (see my short interview with Burger here).

During the keynote, he gave what he called a “visual demo” of the impact of these FPGA accelerators on Azure’s processing power. First we saw accelerated image recognition. Then a translation example, using Tolstoy’s War and Peace as a demo:

The FPGA-enabled server consumed less power but performed the translation 8 times faster. The best was to come though. What about translating the whole of English Wikipedia? “I’ll show you what would happen if we were to throw most of our existing global deployment at it,” said Burger.

“Less than a tenth of a second” was the answer. Looking at that screen showing 1 Exa-op felt like being present at the beginning of a computing revolution. As the Top500 supercomputing site observes, “the fact the Microsoft has essentially built the world’s first exascale computer is quite an achievement.” Exascale is a billion billion operations per second.

However, did we see Wikipedia translated, or just an animation? Bearing in mind first, that Burger spoke of “what would happen”, and second, that the screen says “Estimated time”, and third, that the design of Azure’s FPGA network (as I understand it) means that utilising it could impact other users of the service (since all network traffic to the hosts goes through these boards), it seems that we saw a projected result and not an actual result – which means we should be sceptical about whether this would actually work as advertised, though it remains amazing.

One more puzzle before I wrap up. Adobe CEO Shantanu Narayen appeared on stage with Nadella, in the morning keynote, to announce that Adobe will make Azure its “preferred cloud.” This appears to include moving Adobe’s core cloud services from Amazon Web Services, where they currently run, to Azure. Narayen:

“we’re thrilled and excited to be announcing that we are going to be delivering all of our clouds, the Adobe Document Cloud, the Marketing Cloud and the Creative Cloud, on Azure, and it’s going to be our preferred way of bringing all of this innovation to market.”

Narayen said that Adobe’s decision was based on Microsoft’s work in machine learning and intelligence. He also looked forward to integrating with Dynamics CRM for “one unified and integrated sales and marketing service.”

This seems to me interesting in all sorts of ways, not only as a coup for Microsoft’s cloud platform versus AWS, but also as a case study in migrating cloud services from one public cloud to another. But what exactly is Adobe doing? I received the following statement from an AWS spokesperson:

“We have a significant, long-term relationship and agreement with Adobe that hasn’t changed. Their customers will want to use AWS, and they’re committed to continuing to make that easy.”

It does seem strange to me that Adobe would want to move such a significant cloud deployment, that as far as I know works well. I am trying to find out more.

cloud computing, microsoft

Microsoft pivot: Ignite is now its key conference

September 24, 2016 onlyconnect

I have been covering Microsoft for quite a few years and it was always clear to me that the must-attend event, if you want to keep up with the company, was the Professional Developer Conference (PDC), and after that was scrapped, its successor developer event Build.

The reason for this is that at PDC or Build the company gives in-depth presentations on the latest features of its developer platform. Pivotal events that I recall include PDC 2003 where we learned about the “Three pillars of Longhorn”, PDC 2008 where Windows 7 was previewed, and Build 2011 where Windows 8 was unveiled.

Two of these three worked out badly for the company, and one fantastically well. The three pillars of Longhorn became the two pillars of Vista after a notorious “reset” of Windows development, while Windows 8 was so hated in the PC community that Microsoft retreated to the more familiar and desktop-oriented Windows 10 a few years later.

Windows 7 on the other hand was such a success that even today, more than a year after the release of Windows 10, many PCs ship with Windows 7 pre-loaded and 10 as an upgrade option. Well, maybe that is a sign of failure (of the later versions) rather than success; but however you choose to spin it, it has been hugely popular.

Perhaps I should also mention PDC 2000 where the .NET Framework was announced (strictly, it was announced at TechEd Europe the previous week, but I digress). That one worked out pretty well I guess, though not without internal conflict between the C++ folk and the .NET Folk – played out in both the Longhorn story and the Windows 8 story.

The reason though why these events were so strategically revealing was that nothing at Microsoft mattered more than the direction of Windows. These events were about informing and attracting developers to the Windows platform.

Alongside its developer events, Microsoft has always held others aimed more at system administrators, events like TechEd (especially the USA variant), MEC (Microsoft Exchange Conference) and Microsoft Management Summit (last held in 2013). While always interesting, it seemed to me that these IT Admin events were less strategic than the developer events, because the Windows platform was the foundation of the company’s business and it was at the developer events that you saw this platform evolve.

In August 2013 Microsoft co-founder Steve Ballmer stepped down as CEO, to be replaced by server guy Satya Nadella, accelerating the company’s pivot away from Windows and towards Office 365 and Azure as its key platform. Microsoft’s cloud runs on Windows of course, even if many of the VMs on Azure end up running Linux, but the company is now keen to emphasize its support for any operating system – or to be more precise, Windows, Mac, iOS, Android, and that vague thing IoT – presumably on the basis that broad endpoint support makes its cloud offering more compelling.

I could write screeds about Windows 10 and its evolution, about which I have mixed feelings. Windows for sure remains critically important to Microsoft, and indeed to all of us who feel that it meets needs that its competition does not address. (The answer is not always “just use a Mac”, if only because of Apple’s addiction to premium pricing and high profit margins).

Nevertheless, it is the cloud and hybrid cloud offerings that come first in today’s Microsoft, and Windows server rather than Windows 10 that is more strategically important.

That is why Microsoft Ignite, which starts on Monday 26th September 2016 and is aimed primarily at IT administrators, that is now the key event. Here we will see the formal launch of Server 2016 as well as Azure and Office 365 news; and I plan to pay close attention.

cloud computing, microsoft, windows

Notes from the field: Office 365 pain following Windows 10 upgrade

August 9, 2016 onlyconnect

I got involved in looking at a PC where a few Office 365 problems had arisen following an upgrade to Windows 10 (prompted by Microsoft supposedly ending its free upgrade offer).

In particular, SharePoint online was crashing Internet Explorer. Internet Explorer? Don’t Windows 10 users stick to Edge?

Unfortunately Edge is problematic with certain sites. It works OK with Office 365 but there are some issues. For example, open a SharePoint document library in IE and you get the very useful option to “Open with Explorer”, an Explorer UI for your cloud-hosted files.

Try this in Edge and you get:

Note how the help information does not tell you how to fix the problem.

For reasons like this, the user still had a shortcut to SharePoint online in IE on the Windows 10 taskbar. Click it though, and IE would crash with its “Internet Explorer has stopped working” dialog.

Probably an add-on, I thought. This was proved right when I opened IE with add-ons disabled – try running:

"%ProgramFiles%\Internet Explorer\iexplore.exe" –extoff

– and found that SharePoint online worked fine. After some experimentation, I discovered that the SharePoint Export Database Launcher add-on was causing the problem. Disabled it and SharePoint worked fine.

This add-on is installed by Microsoft Office. It prompts a couple of thoughts.

I do not know if every Windows 10 PC is similarly afflicted, but problems like this do suggest a lack of quality control in some areas. It is also unfortunate that when you install Office 365 Professional Plus you do not get any options; you get everything. Including, in this case, a buggy add-on.

Second, I wish Microsoft would pause from its energetic feature work with Office 365 and sort out the core functionality of working with documents in SharePoint online. As someone pointed out to me on Twitter today, the situation with OneDrive sync clients remains a mess, and when it goes wrong it is not always easy to troubleshoot.

Incidentally, I cannot resist telling you how to fix another OneDrive for Business issue. Here’s the problem: you open a document library in a web browser (even works in Edge), hit Sync, and OneDrive for Business fires up. If this is the first document library to be synced you might be prompted to sign in. So you enter your email address, hit Next, and then enter your password and click Sign in. Sometimes though nothing happens and you can’t sign in. What’s the fix? Don’t click Sign-in, press Enter!

amazon, cloud computing

AWS Summit London 2016: no news but strong content, and a little bit of Echo

July 8, 2016 onlyconnect

I attended day two (the developer day) of the Amazon Web Services Summit at the ExCel conference centre in London yesterday. A few quick observations.

It was a big event. I am not sure how many attended but heard “10,000” being muttered. I was there last year as well, and the growth was obvious. The exhibition has spilled out of its space to occupy part of an upper mezzanine floor as well. The main auditorium was packed.

Amazon does not normally announce much news at these events, and this one conformed to the pattern. It is a secretive company when it comes to future plans. The closest thing to news was when AWS UK and Ireland MD Gavin Jackson said that Amazon will go ahead with its UK region despite the referendum on leaving the EU.

CTO Dr Werner Vogels gave a keynote. It was mostly marketing which disappointed me, since Vogels is a technical guy with lots he could have said about AWS technology, but hey, this was a free event so what do you expect? That said, the latter part of the keynote was more interesting, when he talked about different models of cloud computing, and I will be writing this up for the Register shortly.

Otherwise this was a good example of a vendor technical conference, with plenty of how-to sessions that would be helpful to anyone getting started with AWS. The level of the sessions I attended was fairly high, even the ones described as “deep dive”, but you could always approach the speaker afterwards with your trickier issues. The event was just as good as some others for which you have to pay a fee.

The sessions I attended on DevOps, containers, microservices, and AWS Lambda (serverless computing) were all packed, with containers perhaps drawing the biggest crowd.

At the end of the day I went to a smaller session on programming for Amazon Echo, the home voice control device which you cannot get in the UK. The speaker refused to be drawn on when we might get it, but I suppose the fact that Amazon ran the session suggests that it will appear in the not too distant future. I found this session though-provoking. It was all about how to register a keyword with Amazon so that when a user says “Alexa what’s new with [mystuff]” then the mystuff service will be invoked. Amazon’s service will send your service the keywords (defined by you) that it detects in the question or interaction and you send back a response. The trigger word – called the Invocation Name – has to be registered with Amazon and I imagine there could be big competition for valuable ones. It is all rather limited at the moment; you cannot create a commercial service, for example, not even for ordering pizzas. Check out the Alexa Skills Kit for more.

Presuming commercial usage does come, there are some interesting issues around identity, authentication, and preventing unauthorised or inappropriate use. Echo does allow ordering from Amazon, and you can optionally set a voice PIN, but I would have thought a voice PIN is not much use if you want to stop children ordering stuff, for example, since they will hear it. If you watch your email, you would see the confirming email from Amazon and could quickly cancel if it were a problem. The security here seems weak though; it would be better to have an approval text sent to a mobile, for example, so that there is some real control.

Overall, AWS is still on a roll and I did not hear a single thing about security concerns or the risks of putting all your eggs in Amazon’s basket. I wonder if fears have gone from being over blown to under recognized? In the end these considerations are not quantifiable which makes risks hard to assess.

I could not help but contrast this AWS event to one I attended on Microsoft Azure last month. AzureCraft benefited from the presence of corporate VP Scott Guthrie but it was a tiny event in comparison to Amazon’s effort. If Microsoft is serious about competing with AWS it needs to rethink its events and put them on directly rather than working through user groups that have a narrow membership (AzureCraft was up on by the UK Azure User Group).

azure, cloud computing, Notes from the field

The case of the disappearing Azure AD application registration

July 5, 2016 onlyconnect

Some time ago I wrote a simple web application which runs on Microsoft Azure and uses Azure Active Directory for authentication. The application is used constantly and has proved reliable; however yesterday it stopped working. A quick debug session showed that the problem was an Azure AD permissions error.

In order to use Azure AD, applications have to be registered in the Azure management portal. I use the old portal for this; I am not sure that the functionality exists in the new portal yet. There is a nice how-to here.

One of the elements in the registration is a key which has a maximum lifetime of 2 years:

My application was deployed about two years ago so I went to the portal to see if it had expired.

What I found surprised me. The application was not listed at all. It had disappeared.

Instead of simply obtaining a new key and updating my application config, I had to create a new application registration and update several keys in the config, which was an annoyance.

There is a wider point here, in the whole category of dealing with “things that expire”. Some time ago, Microsoft suffered an extended Azure outage because of an expired certificate. It is a shame that Microsoft insists on a maximum 2 year lifetime for this key but does not provide a check box for “alert me when this key is about to expire”, how difficult would that be?

Problems like this also mean that things which “just work” may not continue to do so. Of course a well organised enterprise setup can deal with this type of problem, but imagine, for example, the case of a small business with an application running on Azure where the developers have gone out of business, perhaps, or are no longer available. In fact the only code I needed to change was in web.config, but I can imagine it could take some time to figure out what to do and what to change.

cloud computing, microsoft

Outlook 2016 attachment mysteries and annoyances

February 17, 2016 onlyconnect

Microsoft Outlook 2016 has a new feature which the company highlighted when it first appeared, which is that it sends attachments as links by default, if they are stored in network-accessible locations. The idea is to prevent proliferation of different versions if several respondents make changes and email them back. It also means that everyone has the latest version. Good stuff, right?

I am not sure. Of course Outlook is meant to give you the choice about whether to send as a link or as a copy, but we all know that busy people just click and expect it to work; they mostly will not think through which method is appropriate in a particular case, or in some cases, even understand the difference. One of the implications of sending links is that the document received may not be what is sent. For example, consider this scenario:

1. Hmm, shall I send the minutes of our last meeting to this person at supplier X? Better check there is nothing sensitive in it. [Checks]. OK, send.

2. Colleague happens to look at minutes, thinks, why did we not minute our difficulties with supplier X? Adds section of sensitive information and proposal to switch to supplier Y.

3. Person at supplier X receives document …

OK, my scenario is somewhat contrived, but you can see the underlying issue.

There is also the question of whether the mechanism behind this feature is really robust. It is not in fact a simple feature. What is meant to happen is that Outlook detects whether your document can be sent as a link, and if it can, interacts with SharePoint to create a magic link with either view or edit permissions. In my experience, it is easy to end up sending an attachment that cannot in fact be accessed by the person at the other end.

I have an internal SharePoint and soon figured out that I had to prevent Outlook from sending documents as links. The URL I use for SharePoint internally is not accessible externally, which is perhaps a flaw in my setup, but not one that has ever caused problems before. In any case, I would prefer not to give out any magic links to documents in my SharePoint; it just seems an unnecessary security risk.

In the case of Office 365, note that external sharing may be switched off, in which case links will not work. External sharing may also be disabled for specific sites.

Maybe Outlook 2016 is smart enough to detect whether or not external sharing is enabled, but if so, this does seem to go wrong sometimes. I have seen cases where users send an attachment link, but the recipient cannot access the document. Rather, they click the link and get a “can’t be found in directory” error or similar.

Another issue is that Outlook 2016 does not always offer you the choice of link or attachment. Here is how it is meant to work. What happens sometimes though is that the attachment does not end up in the “attached” header at the top of the email, but rather in the body. In this scenario, you actually end up with a small Word table (Outlook messages use the Word editor) that cannot be converted into a standard attachment:

Note the little icon, an embedded image, which includes a cloud to give you a clue that this is not really attached. It also seems to mess up text formatting; note that my typing is now Times New Roman rather than Calibri. Another Outlook mystery.

This problem only seems to happen if you select a file from Outlook 2016’s recently accessed document list, which appears when you click the new Attach File button:

So how do you prevent this behaviour? Given the difficulties it can cause, I thought Outlook might have an option to disable sending attachments as links, or at least to prevent it happening by default. I have not found such an option yet. One point to bear in mind is that in previous versions of Outlook it was not easy to send a document from SharePoint at all, unless you could access it from Windows Explorer. This means using WebDAV (“Open in Explorer”), or the still-problematic OneDrive for Business client. So the dropdown with recently accessed SharePoint and OneDrive documents is new and potentially welcome functionality.

Here are a couple of workarounds though. If you format an email as plain text, which you can set as default if you choose, then you will not get the embedded link that cannot be changed. Instead, you will get the dialog with options to link or attach a copy:

What if you want Outlook 2016 to behave like Outlook 2013 and earlier? Well, the Attach File with the dropdown is not customizable directly, but you can add an old-style Attach File button. To do this, start a new email, right-click the toolbar, and click Customize the Ribbon. Right-lick the New Mail Message section on the right, and choose Add new group. Then select the Attach File command on the left, and the new group on the right, and click Add. I have called my new group Custom:

The effect is that you now have two Attach File commands, one of which behaves just like Outlook 2013:

My custom Attach File is on the right in the image above, does not have a drop-down list, and simply selects a file using an insert file dialog.

I appreciate that these are workarounds and not complete solutions.

Did Microsoft really think through this feature? Why the bugs? Why no easy way to disable it? I wish I knew.

cloud computing, microsoft

Microsoft Office 365 and desktop friction

February 16, 2016 onlyconnect

Microsoft would like us to think of Office 365, its hosted email and collaboration service, as “cloud”. And it is in many ways; you can even get all your email and Onedrive-stored documents direct from a web browser.

The truth though is that Microsoft has been careful not to disrupt its desktop Office software too much. Most users, in my experience, choose Office 365 in part because of its integration with Outlook, Word and Excel. You can install the software from the Office 365 portal, and open and save documents from Onedrive for Business.

Another part of the service is online chat and conferencing, for which you need the Skype for Business (formerly Lync) client on your PC.

There is an issue here though. Part of the attraction of “cloud” is that you do not have to manage software; but in the case of Office 365 you do have to manage the software that is installed on your PC. Microsoft’s investment in click-to-run installation has helped to simplify the setup, but under the covers it is as complex as ever.

Take the case of a small business I know, which was on the Office Midsize Business plan. Microsoft has retired this plan, so when it came to renewal time the customer had to change to a different plan. If they wanted to keep *all* the features of Midsize Business, including the Access database app, they could migrate to the Enterprise E3 plan – at £14.70 per month, nearly double the £7.80 per user/month for Midsized Business. On the other hand, they could migrate to the Business Premium plan for the same cost and, well, *nearly* the same features. The horrible details are here.

They didn’t use Access so Business Premium seemed OK. On the cloud side, the migration was straightforward. However, since Access was no longer included they had to remove and reinstall Office, as well as the Skype for Business client.

In this particular small business, most of the users needed some assistance with this operation. Unfortunately there is no single button to click that will remove the old Office and install the new one. You have to remove Office using Control Panel, then reinstall it from the Office 365 portal. Removing Office removes the old Skype for Business client, but putting it back means choosing a separate installation option in the portal, which most of them missed. One user somehow ended up with two versions of Office 2016 installed, neither of which worked properly. Office would not activate, reported an error, and offered to repair itself. This was not going to work, since it was the wrong version of Office.

Even when it goes smoothly, the business of removing Office and reinstalling both the desktop software and Skype for Business takes a long time, over an hour.

Overall, life in the Office 365 era is easier than it was in the days of 27 Office floppies, one or two of which were bound to be unreadable. Nevertheless, it is friction, and not fulfilling the seamless promise of cloud.

cloud computing, microsoft, mobile

Microsoft’s story continues: Windows down, cloud up in financials Oct-Dec 2015

January 29, 2016 onlyconnect

Microsoft has reported its latest financial results, for the quarter ending December 31st 2015.

Here are the latest figures (see end of post for what is in the segments):

Quarter ending December 31st 2015 vs quarter ending December 31st 2014, $millions

Segment	Revenue	Change	Operating income	Change
Productivity and Business Processes	6690	-132	6460	-528
Intelligent Cloud	6343	+302	4977	+272
More Personal Computing	12660	-622	3542	+528
Corporate and Other	-1897	-2222	-1897	-1980

A few points to note.

Revenue is down: Revenue overall was $million 23.8, $million 2.67 down on the same quarter in 2014. This is because cloud revenue has increased by less than personal computing has declined. The segments are rather opaque. We have to look at Microsoft’s comments on its results to get a better picture of how the company’s business is changing.

Windows: Revenue down 5% “due primarily to lower phone and Windows revenue and negative impact from foreign currency”.

Windows 10: Not much said about this specifically, except that search revenue grew 21% overall, and “nearly 30% of search revenue in the month of December was driven by Windows 10 devices.” That enforced Cortana/Bing search integration is beginning to pay off.

Surface: Revenue up 29%, but not enough to offset a 49% decline in phone revenue.

Azure: Azure revenue grew 140%, compute usage doubled year on year, Azure SQL database usage increased by 5 times year on year.

Office 365: 59% growth in commercial seats.

Server products: Revenue is up 5% after allowing for currency movements.

Xbox: Xbox Live revenue is growing (up 30% year on year) but hardware revenue declined, by how much is undisclosed. Microsoft attributes this to “lower volumes of Xbox 360” which is lame considering that the shiny Xbox One is also available.

Further observations

This is a continuing story of cloud growth and consumer decline, with Microsoft’s traditional business market somewhere in between. The slow, or not so slow, death of Windows Phone is sad to see; Microsoft’s dismal handling of its Nokia acquisition is among its biggest mis-steps and hugely costly.

CEO Satya Nadella came from the server side of the business and seems to be shaping the company in that direction, if he had any choice.

Azure and Office 365 are its big success stories. Nadella said in the earnings call that “the enterprise cloud opportunity is massive, larger than any market we’ve ever participated in.”

A reminder of Microsoft’s segments:

Productivity and Business Processes: Office, both commercial and consumer, including retail sales, volume licenses, Office 365, Exchange, SharePoint, Skype for Business, Skype consumer, OneDrive, Outlook.com. Microsoft Dynamics including Dynamics CRM, Dynamics ERP, both online and on-premises sales.

Intelligent Cloud: Server products not mentioned above, including Windows server, SQL Server, Visual Studio, System Center, as well as Microsoft Azure.

More Personal Computing: What a daft name, more than what? Still, this includes Windows in all its non-server forms, Windows Phone both hardware and licenses, Surface hardware, gaming including Xbox, Xbox Live, and search advertising.

cloud computing, microsoft

Microsoft financials July-Sept 2015: decline of Windows hits home, cloud rises

October 23, 2015 onlyconnect 1 Comment

Microsoft has reported its financials for its first quarter. Making sense of these is harder than usual because the company has changed its segment breakdown (and the names are misleading). The new segments are as follows:

Intelligent Cloud: Server products not mentioned above, including Windows server, SQL Server, Visual Studio, System Center, as well as Microsoft Azure.

Here are the latest figures:

Quarter ending Sept 30th 2015 vs quarter ending Sept 30th 2014, $millions

Segment	Revenue	Change	Operating income	Change
Productivity and Business Processes	6306	-184	3105	-233
Intelligent Cloud	5892	+417	2400	+294
More Personal Computing	9381	-1855	1562	-57
Corporate and Other	-1200	-1200	-1274	-55

A few points to note.

Death of Windows Phone: Microsoft acquired Nokia’s Devices and Services business in April 2014. In fiscal year 2015, according to Microsoft’s 10-Q report, the company “eliminated approximately 19,000 positions in fiscal year 2015, including approximately 13,000 professional and factory positions related to the Nokia Devices and Services business.” This was rationalisation following the acquisition; the real blow came a year later. “In June 2015, management approved a plan to restructure our phone business to better focus and align resources (the “Phone Hardware Restructuring Plan”), under which we will eliminate up to 7,800 positions in fiscal year 2016.”

Windows Phone is not quite dead, but Microsoft seems to have given up on the idea of competing with Android and iOS in the mainstream. Year on year, phone revenue is down 58%, Lumia units down from 9.3 million to 5.8 million, non-Lumia phones down from 42.9 million to 25.5 million. This is what happens when you tell the world you are giving up.

Windows: Revenue down 7% “driven by declines in the business and consumer PC markets”.

Surface: Revenue down by 26% because Surface Pro 3 launched in June 2014; this should pick up following the launch of new Surface hardware recently.

Cloud: Microsoft’s “Commercial cloud” comprises Office 365 Commercial, Azure and Dynamics CRM online. All are booming. Azure revenue and usage more than doubled year on year, with 121% revenue growth. In addition, Office 365 consumer subscribers increased by 3 million in the quarter, to 18.2 million, an increase of nearly 20%.

Server products: Revenue is up 6% thanks to “higher revenue from premium versions of Microsoft SQL Server, Windows Server, and System Center”

Xbox: Steady, with Live revenue up 17%, Minecraft adding 17% to game revenue, and hardware revenue down 17% because of Xbox 360 declining (and by implication, not being replaced by Xbox One, a worrying trend).

Further observations

Is Microsoft now facing permanent long (but slow) decline in Windows as a client or standalone operating system? It certainly looks that way. The last hope is that Windows 10 in laptop, tablet and hybrid forms wins some users over from Mac computers and iPad/Android tablets. Despite some progress, Microsoft still has work to do before Windows delivers the smooth appliance-like experience of competing tablets, so I do not regard this as likely. The app ecosystem is also a problem. Tablets need Universal Windows Platform (UWP) apps but developers can still target more Windows users with desktop apps, discouraging UWP development.

Microsoft is also busy removing the advantage of Windows by stepping up its first-party Mac, iOS and Android application development, though this makes sense as a way of promoting Office 365.

That leads on to the next question. If Windows continues to decline, can Microsoft still grow with Office 365 and Azure? Of course it is possible, and on these figures that strategy looks to be going reasonably well. That said, you can expect both Google to continue integrating Android and of course Chromebook with its rival cloud services. Apple today does not compete so much in the cloud, but may do in future. If the future Microsoft has to relying on third-party operating systems for user interaction it will be a long-term weakness.

Tim Anderson's IT Writing

Category Archives: cloud computing

Microsoft at Ignite: Building on Office 365, getting more like Google, Adobe mysteries and FPGA magic

Microsoft pivot: Ignite is now its key conference

Notes from the field: Office 365 pain following Windows 10 upgrade

The case of the disappearing Azure AD application registration

Microsoft Office 365 and desktop friction

Tech Writing