Road to the Cloud The Economics of Cloud Computing

Contents Windows Azure How you can take advantage of Microsoft’s Cloud Pricing, Cost Modelling and Use Cases Get started today tomorrow Market Environment & Cloud Computing The Opportunity

Market Environment & Cloud Computing

Source: National Institute of Standards and Technology

Cloud Computing Patterns Usage Compute Average Inactivity Period On and Off On & off workloads (e.g. batch job) Wasted capacity at idle Unpredictable Bursting Unexpected demand peak Performance deterioration at spike Compute Average Usage Growing Fast Growing fast Complex lead time for deployment Average Usage Compute Predictable Bursting Known/seasonal demand peaks Wasted capacity at troughs Compute A nice incremental cost improvement for most scenarios… A peerless solution for a few

Private (On-Premise) Storage Servers Networking O/S Databases Virtualization Data Applications Integration You manage Dedicated (Managed Hosting) Storage Servers Networking O/S Databases Virtualization Data Applications Integration Managed by vendor You manage Infrastructure (as a Service) Managed by vendor You manage Storage Servers Networking O/S Databases Virtualization Applications Integration Data Platform (as a service) Managed by vendor Storage Servers Networking O/S Databases Virtualization Applications Integration Data ISV Unique Value

IDC, Worldwide Software as a Service 2011–2015 Forecast and 2010 Vendor Shares, Doc # , Aug 2011

IDC, Worldwide Software as a Service 2011–2015 Forecast and 2010 Vendor Shares, Doc # , Aug 2011 )

ISV Top of Mind Issues

Financial Metrics Churn Rate Cash flow and cost of sale Customer Lifetime Value Committed Monthly Revenue Sales & Marketing Licensing Customer Acquisition and Cost of Sale Try before Buy – Click, Try, Buy Sales Cycle Referral Programs Distribution & Support Delivery rhythm Channel Dynamics Service Level Agreements Support Billing

Source: Bessemer Venture Partners: 10 Rules Of Cloud Computing And SaaS

Traditional Sales Process Sales Led, Sales Driven Steps in Sales ProcessHow is this Done? Steps in Sales ProcessHow is this Done? Cloud Sales Process: Customer Led, Support Driven

Large upfront fees replaced by smaller ongoing payments collected and recognized over time Cost of sale has to be managed very carefully Ongoing cost associated with application delivery Upfront investments in R & D, sales, marketing and support with no immediate payback Capital markets that assume exponential customer adds and reduced acquisition cost at the margin

On-Premise Software Cloud Services Customers USE it because they PAID for it Customers PAY for it because they USE it

Windows Azure

$3B+ in cloud infrastructure 200+ services, delivered 24x7 Geo-distributed datacenters Rapid modular model 30,000+ software engineers involved in cloud-based activities 2,000+ people in cloud infrastructure engineering and operations Redundancy failovers across multiple geographies Multi-dimensional approach to help safeguard services and data privacy ISO 27001, SSAE16, FERPA, HIPAA, FISMA, and EU Model clauses compliant Carbon footprint reduction 99.9% uptime financially backed SLAs >15 years in consumer and business ‘cloud’ services 280M users on Skype each month worldwide Xbox one of largest paid services in the world 1 petabyte+ per month of updates via Windows Update Office Web Apps: 50M users 25

CDNCaching Identity & security Business analyticsCommerceMediaIntegrationHPC ComputeData managementNetworking SQL database noSQL database Websites Cloud services Blob Connect Virtual network Traffic managerVMs Global Physical Infrastructure servers/network/datacenters Automated Elastic Managed resources Usage based

North America RegionEurope RegionAsia Pacific Region 8 datacenters across 3 continents New region and data centers announced for Australia

Pricing, Cost Modelling and Use Cases

Develop Innovate quickly …on an open and comprehensive platform Use what you know Cut development time Most comprehensive Sell Grow your business …no matter where you are starting from Uncover new revenue Application marketplace to grow sales Partner support eco-system Scale Reliably …with fully managed hardware and software Scale to demand Reduce costs Rely on world class security, continuity, privacy