Smooth transition to Azure says Microsoft

Enterprises looking to adopt Azure, Microsoft's cloud-computing platform, will be offered a simplistic a migration path according to a company executive. However, Microsoft has still left a lot of questions unanswered even after revealing some details of its pricing.

Microsoft said Azure , which will be available commercially in November, would be included as part of the volume licensing contracts through which many large customers pay for Microsoft products, though it did not clarify how these contracts would incorporate both a pay-as-you-go model and licences calculated on a per-CPU basis.

Doug Hauger, a Microsoft general manager, said that Microsoft would have much more detail on the specific integration of Azure pricing into enterprise contracts in November. But he said Microsoft would keep Azure separate from its traditional software licensing so as not to confuse customers.

"We'll make sure it's integrated into enterprise agreements and not complicated," Hauger said. "It will be just another page in the agreement. We want simplicity in how we license and [provide] access."

Despite these good intentions, Microsoft has already run into some complexities as it tries to integrate new pricing models for its more web-orientated offerings into traditional enterprise contracts and the licences they require for users.

In particular, pricing for its hosted Business Productivity Online Suite (BPOS) - which includes hosted versions of Exchange, SharePoint, LiveMeeting and Office Communications - is causing customers some concern, said Paul DeGroot, an analyst with research firm Directions on Microsoft.

If a customer purchases a BPOS subscription for employees who will access only those services, the customer must still purchase CALs for those users, DeGroot said, even though they are not accessing the on-premise software as well.

Microsoft gives customers a discount on other parts of their licence in such scenarios - on the Software Assurance (SA) maintenance programme required for enterprise agreements, for example - but they still end up paying for something they are not using, DeGroot said.

Depending on how it wants to give companies access to Azure beyond the pay-as-you-go pricing model, the company could run into the same trouble with its cloud-computing platform, he said. "With Azure it could get even more complicated," DeGroot said.

To mitigate any complexities, Hauger said Microsoft is, on request, giving customers options for how they can license Azure, pricing that is separate from software they already pay for.

In addition to an option to pay only for what users consume, Microsoft also will offer what it's calling a development accelerator that will allow people to pay a one-time fixed price for six months of access to Windows Azure as a more predictable pricing option, he said.

"We consider what it would take to run that application full time for six months and discount that 45 percent," Hauger said of how Microsoft is pricing Azure in the accelerator programme. "It's a set amount."

What Microsoft is going for as it adds more pricing options beyond per-CPU pricing is a more continuous revenue stream, said Directions on Microsoft founder and CEO Rob Horowitz.

"They're trying to go back to the old mainframe model where customers have to pay you something every year," he said. "It's like 'Hotel California,'" Horowitz continued.

He added that there likely will be some "transition issues" as Microsoft moves enterprise customers to these new pricing models.