At first sight the announcement of the new Microsoft Cloud OS Partner Network sounds indeed interesting. Who doesn’t want to use the Microsoft public cloud directly, as of now can select from one of several partner to access the Microsoft technologies indirectly. It is also possible to span a hybrid cloud between the Microsoft cloud and the partner clouds or the own data center. For Microsoft and its technological extension within the cloud it is indeed a clever move. But for the so-called „Cloud OS Partner Network“ this activity could backfire.

Microsoft Cloud OS Partner Network

The Cloud OS Partner Network consists of more than 25 cloud service provider worldwide, which, according to Microsoft, focuses especially on hybrid cloud scenarios based on Microsoft’s cloud platform. For this purpose, they rely on a combination of the Windows Server with Hyper-V, System Center and the Windows Azure Pack. With that, Microsoft tries to underwrite its vision to establish its Cloud OS as a basis for customer data center, service provider clouds and the Microsoft public cloud.

For this reason, the Cloud OS Partner Network serves more than 90 different markets with a total customer base of three million companies worldwide. Overall 2.4 million server and more than 425 data center build the technological base.

Among others the partner network includes provider like T-Systems, Fujitsu, Dimension Data, CSC and Capgemini.

Advantages for Microsoft and the customer: Locality and extension

For Microsoft, the Cloud OS Partner Network is a clever move to, measured by the distribution of Microsoft cloud technologies, gains more worldwide market share. In addition, it fits perfectly into Microsoft’s proven strategy to serve the customer not directly but over a network of partner.

The partner network also comes towards the customer. Companies who avoided the Microsoft public cloud (Windows Azure), due to data locality reasons or local policies like data privacy, are now able to find a provider in their own country and do not have to dispense with the desired technologies. For Microsoft, another advantage is the fact, not coercively to build a data center in each country, but to concentrate on the existing or the strategically important once.

With that, Microsoft can lean back a little and let again make a partner network do the uncomfortable sales. The incomes come, as before the age of the cloud, over selling licenses to the partner.

Downside for the partner: Diversification

You can find great stories about this partner network. But the fact is, with the Cloud OS Partner Network, Microsoft creates a similar competitive situation you can find in the OpenStack Community. Especially in the public cloud, with Rackspace and HP, there exist just two „top provider“, who only play a minor part in the worldwide cloud circus. Notably HP fights more with itself and is therefore not able to concentrate on innovations. However, the main problem of both and all the other providers is that they are not able to differentiate from each other. Instead, most of the providers stand in a direct competition to each other and currently not diverge significantly. This is due to the fact, that all set on the same technological base. An analysis on the current situation of the OpenStack community can be found under “Caught in a gilded cage. OpenStack provider are trapped.”

The situation for the Cloud OS Partner Network is even more uncomfortable. Unlike in OpenStack, Microsoft is the only technology supplier and decides where it is going on. The partner network need to swallow what is set before them and just can adapt further technology stacks which lead to more overhead and thus further cost for development and operations.

Except for the local markets, all Cloud OS service provider are in a direct competition and based solely on Microsoft technologies are not able to differentiate otherwise. Good support and professional services are extremely important and an advantage but no USP in the cloud.

If the Cloud OS Partner Network flops, Microsoft will get away with a black eye. The great harm the partners will carry home.

Technology as a competitive advantage

Looking at the real successful cloud provider on the market it becomes clear that those who have developed their clouds based on an own technology stack and therefore differentiate technological from the rest. These are Amazon, Google or Microsoft and precisely not Rackspace or HP who both set on OpenStack.

This, Cloud OS partner like Dimension Data, CSC or Capgemini should keep in mind. In particular CSC and Dimension Data have big claims to have a say in the cloud.