Microsoft to Tout Azure and Office 365 Apps In Cloud Battle

Microsoft will turn up the volume on its cloud computing story at its Ignite tech conference Monday, announcing that a key component of its roadmap—Azure Stack—is now available. Microsoft CEO Satya Nadella and cloud chief Scott Guthrie, along with their lieutenants, will be on hand at the Orlando event this week.

Azure Stack, which Microsoft (MSFT) has talked about for more than two years, promises to let businesses run software in their own data centers that mirrors what Microsoft runs in its Azure cloud computing facilities. By doing so, companies can keep sensitive data inside their own firewalls while offloading other workloads to data centers run and managed by Microsoft.

The new service isn’t free, of course. Customers will be able run Azure Stack as long as they buy a major chunk of hardware from Dell Technologies, Hewlett Packard Enterprise (HPE), or Lenovo that was built for that software. An HPE Proliant server to run Azure Stack will cost from $300,000 to $400,000, depending on configuration.

Being able to mix-and-match private and public cloud data centers is what techies call the hybrid computing model. Amazon Web Services, which blazed the trail in the use of shared, public cloud data centers, still seems intent on putting the lions’ share of customer data and operations in Amazon (AMZN) facilities.

“Microsoft realizes that enterprises want the hybrid option and Azure Stack bolsters that,” said Constellation Research analyst Holger Mueller. Many companies, especially those outside North America, want technology that can run internally but also fall back to run on the public cloud as needed. “At the end of the day the customer is king—and pays the bills,” Mueller said.

To sweeten the pot, Microsoft customers will get free use of the Cloudyn cloud cost management tool through the end of June. Microsoft bought Cloudyn earlier this year. for an undisclosed amount.

Microsoft execs will also talk up the company’s Office 365 apps franchise, which includes the bread-and-butter word processing and spreadsheet packages used broadly, but also more specialized applications, under the Dynamics 365 brand, for different constituencies within a company. At the conference, Microsoft will announce software modules for human resources pros who specialize in talent acquisition, for example. The not-so-poetic names of these modules? Dynamics 365 for Talent: Attract and Dynamics 365 for Talent: Onboard.

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The addition of new applications to Microsoft’s lineup shows how the company will increasingly compete with the same application providers it hopes will run their own operations on Azure. The Azure team at Microsoft would probably like nothing better than to attract companies like Salesforce (CRM) to run on Azure data centers. At the same time, the apps side of Microsoft is building software that competes with software from—you guessed it—Salesforce. Probably not coincidentally, Salesforce has inked a major cloud hosting deal with AWS, but not Microsoft.

Microsoft execs will also talk more about deeper integration between LinkedIn—the business social network company Microsoft acquired in 2016 for $26.2 billion—and its business software. For example, users will soon be able to send LinkedIn email messages right from their Dynamics 365 sales application instead of having to toggle between the two.

And, like app rival Salesforce, Microsoft says it is building artificial intelligence (AI) into its office software, so that the software itself learns from user interactions about what they want it to do.

All of this is happening as Microsoft contends with the market leader AWS in public cloud infrastructure and with Google in office apps, search, and other areas. All three of these companies, along with Facebook (FB), IBM (IBM), and Salesforce are also fighting for credibility in key foundation technologies, like artificial intelligence, that they are building into their own software.

Note: (September 25, 2017 9:27 a.m. EDT) This story was updated to add mention of the Cloudyn cloud cost management promotion.