Looking Ahead: How Dynamics Fits Into Microsoft’s Larger Vision of “The Magic of the Cloud”

There were two major refrains by Microsoft executives at Convergence 2010:

--"Unify and simplify."
--"The Cloud."

Behind these refrains is an emerging technology and economic model that Microsoft executives are aggressively pursuing.

"There is a fundamental shift going on," Stephen Elop, president of Microsoft Business Division, told a group of analysts and journalists. And he strongly suggested that as part of the shift, Microsoft Dynamics will increasingly become less a discrete offering and more part of a diverse integrated package for users.

A key part of the shift is what Elop referred to as "the cloud computing economic model."  At first glance, the cloud model would seem to be a negative for Microsoft, he suggested, since ever more technology is available at ever declining prices.

But "the magic of the cloud," as Elop put it, consists of two major forces. For users, it's obtaining "computer services at lower cost." That's because the cloud makes available servers by the thousands around the globe.

"What does this mean for Microsoft?" asked Elop. In his view, that signifies "a revenue growth and power growth opportunity."

He and other Microsoft executives spoke of Microsoft's efforts to establish server centers around the globe. This is no simple task, since different countries have different security and privacy laws. One Microsoft executive pointed out that users in Europe are concerned that servers in the U.S. could have less privacy protection than those in Europe, thanks to new laws intended to counter terrorism. 

Only a few large organizations can put together such worldwide server networks, and Microsoft aims to be one of them, Elop indicated.

The downward pricing pressure on server capacity and proprietary ...