By Don Clark
Cloud computing has thrown computer makers into a forbidding
landscape where prospective customers have incentives to rely on
external service providers rather than buying hardware. But some
have found a key ally in one of the biggest cloud providers,
Microsoft Corp.
Hewlett Packard Enterprise Co. and Dell Technologies this week
are using a Microsoft event in Atlanta to step up their public
embrace of the software giant's Azure cloud service. The
collaboration is deeper than their dealings with cloud vendors such
as Amazon.com Inc.'s AWS unit, which leads the sector, and Google
Inc.
The computer makers' motivations can be linked to the
increasingly familiar phrase "hybrid cloud." The term refers to
companies maintaining their own computing capability as well as
running some computing jobs off their premises, using what the
industry calls public cloud services such as AWS or Azure.
Public cloud services offer customers a series of benefits
besides saving on hardware costs, including the ability to rapidly
begin or discontinue new computing operations as needs change. But
companies have reasons to keep operations on their own premises,
too, including enforcing their own standards for computing
performance and security. Supporters of the hybrid-cloud concept
tout it as the best of both worlds.
Makers of server systems have a strong interest in this
proposition, since sales to traditional enterprise customers make
up the biggest proportion of their hardware revenues. So does
Microsoft, which sells software installed on customer premises as
well offering Azure and other cloud services.
Microsoft appears to agree most strongly with HP Enterprise that
"it will be a hybrid world," said Bobby Patrick, chief marketing
officer for the computer maker's cloud group.
"We are not expecting that all of a sudden you flip a switch and
everything winds up in the public cloud," Jason Zander, a corporate
vice president in the Azure group, said on Monday at the Microsoft
event called Ignite.
Rivals like AWS and Google, by contrast, don't rely on hardware
or software sales to corporations. They tend to predict that public
clouds will gradually take over most if not all computing jobs.
AWS executives have expressed the view that most customers will
eventually stop running their own data centers and move to the
cloud. Nonetheless, AWS helps customers set up hybrid operations.
"The vast majority of hybrid deployments in production at
enterprises today are AWS customers," an AWS spokeswoman said. To
help them, "we've built the broadest and deepest set of services
and features."
Google also has announced a variety of technology to support
hybrid cloud arrangements, and the company plans to discuss some
cloud-related developments at an event Thursday night. A
spokeswoman for the company declined to comment further.
HP Enterprise, one of two entities formed by the breakup of
Hewlett-Packard Co., last fall discontinued a public cloud service
that had failed to gain much market traction and announced plans to
resell Azure as part of a new cloud partnership with Microsoft. On
Tuesday, the company unveiled new services and software to help its
server customers run computing jobs on their own premises with
cloud-style features -- including the ability to quickly set up and
take down new applications -- that are compatible with the Azure
public cloud, so they work the same way on- or off-premises.
Dell, which is also reselling Azure, provided its own string of
Azure-related announcements. New offerings from the Round Rock,
Tx., company, which recently completed its acquisition of EMC
Corp., include new combinations of its servers and Microsoft
software and a way to easily send backup copies of data files from
company-owned computers to Azure.
Dell has also created features to aid customers using Amazon's
cloud service, but "the list is not as long," said Jim Ganthier, a
senior vice president in the Dell EMC converged platforms solutions
division.
He said his company and Microsoft firmly agree that hybrid
clouds are the "end state" for most corporate customers.
History is another reason for the close relationships. Dell and
HP Enterprise have sold Microsoft operating systems and other
software for decades along with both servers and personal
computers.
So has Lenovo Group Ltd., the Chinese company that operates
former International Business Machines Corp. computer businesses
and is also making Azure-related announcements at Ignite. Microsoft
has designated the three big server makers as preferred hardware
partners for Azure.
But analysts see defensive motivations for the alliances as the
cloud phenomenon continues to gain momentum. Cisco Systems Inc.
last week reported survey results showing that 52% of companies are
now using public cloud services for at least some of their
operations, up from 35% in 2015. Hardware companies need to come up
with new incentives to keep customers maintaining their own
computing operations.
International Data Corp. estimates sales to off-premises cloud
services will account for 32.4% of global server shipments this
year. That's a problem for big-name server vendors, since most of
the largest cloud services prefer cheaper models supplied by Asian
vendors such as Quanta Computer Inc. and Wistron Corp., said Matt
Eastwood, an IDC analyst.
HP Enterprise, Dell and Lenovo see Microsoft as a force to help
convince enterprise customers to keep buying servers, said Gina
Longoria, an analyst with Moor Insights & Strategy. "By cozying
up with Microsoft, they really are enabling the hybrid cloud
story," she said.
Executives at the three hardware companies say they are also
working to help customers who want to work with alternatives such
as AWS or Google.
"We can help them get to multiple clouds and pick the right
cloud with the right characteristics," said Mr. Ganthier of
Dell.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
September 27, 2016 17:15 ET (21:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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