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6. Providing ICT resources, as a service, in a dynamic and scalable manner over a network. Fundamental Characteristics On-demand self-service Broad network access Resource pooling Rapid elasticity Measured service A consumer can unilaterally provision computing capabilities as needed without requiring human interaction with each service provider. Capabilities are available over the network and accessed through standard mechanisms used by heterogeneous thin or thick client platforms. The provider’s computing resources are pooled to serve multiple consumers (a multi-tenancy model where a single instance of the software runs on a server, serving multiple client organizations [tenants]). Capabilities can be rapidly and elastically provisioned to quickly scale out and rapidly released to quickly scale in. Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). April 2011Microsoft Confidential—Partner Use Only / Singapore 6 According to the National Institute of Standards and Technology (NIST), October, 2009 V15

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9. Business Productivity Online Suite Exchange Online SharePoint Online Office Communications Online Office Live Meeting Office 365 Exchange Hosted Services Dynamics CRM Online Lync ® Office Web Apps Online companions to: Word Excel ® PowerPoint ® OneNote ® Outlook Live Live@edu Registration & Search Companies Applications Professional Services Hotmail ® Messenger Photo Gallery WL Spaces SkyDrive ® Profile Photos Mesh (beta) Mail Calendar Groups Toolbar Family Safety Writer Movie Maker LiveID Search Maps VXML Platform Speech Recognition Third-Party Cloud Services AppFabric Service: Connectivity Access Control Compute Service: Web Role Worker Role Storage Service: Blobs Tables Queues Fabric Controller: Agent 1 Agent 2 Agent n RDBMS Service: Relational Data Management Virtual Network Overlay Codename “Project Sydney” User Data APIs WL Messenger SDKs WL SDK Microsoft Advertising APIs Silverlight Streaming SDK WL Admin Center SDK WL Spaces SDK WL Client Extensibility APIs Third-Party Cloud Services Data Subscription Service Discover, Purchase Management Open Source SDK: Interactive data access API data access Application Lifecycle Management Dynamic Datacenter Toolkit for Hosters Dynamic Infrastructure Toolkit for System Center (Beta) April 2011 Microsoft Confidential—Partner Use Only / Singapore 9

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13. Five key demand-side issues: Randomness: Customer demand has a degree of randomness. Time of Day: Customer workloads vary based on time zone. Agencies: Different agencies see utilization peaks at different times. Multi-Resource: Compute, storage, and IO are generally bought in bundles, leading to resource underutilization. Uncertain Growth: Predicting and addressing growth issues is difficult and impacts computing capacity. April 2011Microsoft Confidential—Partner Use Only / Singapore13 Pooling heterogeneous customer demand via the cloud dramatically improves resource utilization.

14. Single TenantMulti-Tenant Client #1Client #2Client #3 Instance #1 Instance #2 Instance #3 Client #1Client #2Client #3 Multi-Tenant Instance Multi-tenancy–reduced infrastructure cost and compute resource labor April 2011Microsoft Confidential—Partner Use Only / Singapore14

15. Server hardware costs are ~45% of total costs. Large-volume purchases of commodity or standardized equipment result in lower prices. Datacenter operations are ~25% of total costs. Certain fixed real estate costs can be amortized over larger facilities. Hardware labor costs are ~15% of costs. Large, consolidated datacenters require fewer hardware administrators than smaller disparate facilities. Power costs are ~15% of costs. Agreements with utilities and choosing a favorable site for the datacenter can greatly reduce electricity costs. Larger Datacenters or a network of Datacenters lower the TCO/server costs Source: CSG Annual TCO/Server Declines with Scale *Main Datacenter Cost Elements * Estimates taken from a range of external and internal sources. Absolute numbers should not be compared with (widely varying) server COGs front internal Microsoft properties; focus is on the relative comparison between 1,000 and 100,000 servers. April 2011Microsoft Confidential—Partner Use Only / Singapore15 $1,940 $1,373 $1,142 $723 $721 $193 $645 $72 $0 $1,000 $2,000 $3,000 $4,000 $5,000 1k Server DC100k Server DC $TCO/Server Server HardwareFacilityHardware Operations (Labor)Power $4,449 $2,361

16. Lower cost structure for obtaining innovative IT. Less expensive innovative technologies improve margins and enable rapid and efficient introduction of new services. The subscription model of obtaining IT services eliminates the need for large capital investments. The cumulative economic and technological innovation will increase GDP. April 2011Microsoft Confidential—Partner Use Only / Singapore16

17. April 2011 Microsoft Confidential—Partner Use Only / Singapore 17 Where do you see your core competency in the value chain? Where do you see the opportunity to grow your business in the next 5 years? Resell/ Recommend Service DevelopHost VAR, SI, LAR, AERSI, Telco ISV, SITelco, Hoster, SI

18. Resell/RecommendService Resell/RecommendService DevelopHost Resell/RecommendService DevelopHost Resell/RecommendService DevelopHost Resell/RecommendService DevelopHost Develop Service April 2011 Microsoft Confidential—Partner Use Only / Singapore 18 Develop

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