Windows Server 2012, Azure Should Be WPC Focus, Not Tablet

This week more than 16,000 of Microsoft’s partners are gathered in Houston for its Worldwide Partner Conference 2013. While the software giant’s so-far-unsuccessful efforts to dethrone tablet titan Apple and various Android contenders, seemingly at the expense of its OEM and reseller partners, should continue to dominate conversations, it is such a small part of the overall business opportunities like the cloud, mobility and dominant software platforms like Windows and Windows Server 2012, that this tablet-tempest-in-a-teapot should quickly be relegated to the sidelines.

PC shipments may be faltering, down 13.9% year-over-year for the first quarter, but there were still more than 75 million units shipped, the majority of them Windows-based, according to IDC. Server shipments were also down 3.9% in Q1, to just 1.9 million units, but again, Microsoft still plays a major role. The worldwide software market grew 3.6% year over year in 2012, and with revenues of $58 billion, and Microsoft accounted for 17% of the total $342 billion market, double its closest competitor, IBM ($29B).

Microsoft is in a strong position in the market, writes Wikibon Analyst, Founder & Managing Consultant of the 1610 Group, and former CIO Scott Lowe in his latest Professional Alert. Microsoft’s Azure cloud platform and service offerings are growing rapidly and have crossed the $1 billion threshold. Azure commands about 20% of the cloud market compared to 71% for Amazon Web Services, and analysts are projecting that Azure will expand to 35% next year, mainly at the expense of AWS.

Hyper-V’s market share has increased from 20.3% in 2008 to 27.5% of a much larger market by 2013. This year Wikibon has heard increased interest in Hyper-V as an alternative to VMware from its community of IT professionals. And Windows Server 2012 R2, due for release in late 2013, will include several important improvements to Hyper-V that should increase that interest.

The bottom line is that Microsoft still matters, and one of the biggest untold Microsoft stories of the last 12 months is Windows Server 2012, according to CBT Nuggets‘ Ryan Lee. While Windows 8 sales lag, Windows Server 2012 smashes records, helping its Microsoft division grow by more than 10% CAGR and generate more than $20 billion in revenue and possibly overtaking the company behemoth, Office, said the training and certification company.

Server virtualization is critical to lowering IT capital and operational costs, greater IT efficiency, and improving application provisioning, maintenance, availability, and backup/recovery processes, but there’s also a better-together story, said Enterprise Strategy Group, which recently evaluated the performance, scalability, and efficiency of Microsoft’s Windows Server 2012 with improved Hyper-V virtualization. More than half (55%) of 440 organizations using server virtualization technology had already deployed corporate portal/collaboration solution applications (i.e., Microsoft SharePoint) on production-based VMs, with 22% planning to in the near future.

SharePoint’s role as an enterprise collaboration platform calls for high availability and data mobility, which are two key capabilities provided by server virtualization technology, noted ESG’s Mike Leone. However, the research company found that 59% of respondent organizations have yet to employ virtualization where it will provide the most benefit: their mission-critical tier-1 applications. For IT organizations supporting large numbers of users, hesitance to implement virtualization stems from the perception that it adds performance overhead and unpredictable scalability and availability to the tier-1, multi-user, business-critical applications relied upon by the majority of their users. While understandable, ESG has found that the latest Windows Server 2012 Hyper-V virtualization technology has gone a long way to address those concerns.

Windows Server 2012 is also a cornerstone of the Microsoft Cloud OS vision and can lead to “a reduction in IT infrastructure spend, better data center efficiency, improved IT management, a better experience for end users, and improved service availability”, according to a commissioned study from Forrester Consulting. Over 75% of surveyed customers reported a reduction in IT infrastructure spending, while more than half saw improved storage efficiency and also in server administrator productivity.

Microsoft is strongly positioned in the public cloud market, which is expected to grow at a 21% CAGR, according to Technology Business Research. “With strong growth and a run rate of over $1 billion in cloud revenues, Microsoft’s successful cloud business can become a powerful driver of partner business,” said TBR Software Practice Director Stuart Williams.

In the data center, the premium version of Windows Server, which targets tier one application workloads, saw significant revenue growth in the company’s most recent quarter, said Chris Suh, GM of Investor Relations. “Revenue for Systems Center grew 22% and Hyper-V, our virtualization product, has gained four points of market share over the past year.”

Microsoft is expecting the R2 release of Windows Server 2012 to generate a lot of interest, said Brad Anderson, corporate vice president of Windows Server and System Center program management, in a recent interview. “Historically, a lot of people will wait for SP1 because with SP1 Microsoft typically gets it right, they believe. I think we had some great things in there that will make it easy for users to update from Windows Server 2012 to Windows Server 2012 R2.”



Author: Steve Wexler

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