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Microsoft’s secret cloud sales army

Protocol Enterprise

Welcome to Protocol Cloud, your comprehensive roundup of everything you need to know about the week in cloud and enterprise software. This week: Microsoft's most important relationship isn't necessarily the one you might think, the fallout from Twitter's epic security incident, and why AI-washing is likely to catch up with you in the end.

And some housekeeping: I'm on vacation next week, so there won't be a newsletter Wednesday. See you in two weeks.

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The Big Story

Partners in crime

Microsoft kicked off another virtual conference Tuesday: Out with the annual Inspire gathering with its legions of partners in Las Vegas; in with an online event featuring impeccably arranged Zoom backgrounds and lots of new announcements centered around its cloud business.

Partners are an often overlooked segment in the cloud and enterprise software business, and they range from big consulting companies like Deloitte to small businesses dedicated to helping other small businesses understand how to implement technology.

  • Lots of tech buyers, wary of tech vendor sales forces, prefer to outsource their decision-making processes to a trusted partner that knows their business.
  • All the major cloud companies depend on partners to advance their sales and marketing strategies, but Microsoft is particularly dependent on them: Partners generate around 95% of its commercial cloud revenue, the company's partner czar Gavriella Schuster said in a briefing last year.
  • Remember, Microsoft has been selling enterprise software to corporate IT departments for more than two decades, whereas AWS grew its position in this market among smaller groups of developers. And Google Cloud only got its corporate sales operation going a few years ago.

Partners are also given incentives to sell certain parts of the Microsoft portfolio. So, unsurprisingly, two of the most heavily incented products — Microsoft Azure and Microsoft Teams — received several updates Tuesday.

Microsoft expanded the capabilities of the Azure HCI Stack, which is more or less a cloud in a box, designed to run in a customer's own data center.

  • HCI Stack is part of the "hyperconverged infrastructure" movement, where software is used to define a lot of the complex parts of a modern data center on basic servers, rather than having to buy and manage specialized hardware.
  • The new version is interesting because it doesn't run Windows Server; instead, it relies on a custom operating system that allows customers to manage applications across Azure and their own servers.
  • It also extends security updates for Windows Server 2008 customers, who faced a deadline earlier this year to upgrade before the world changed a lot this spring.

Microsoft also added a number of new features to Teams, its Zoom-and-Slack competitor for workplace collaboration.

  • Third-party app developers now have a lot more access to Teams, which should help businesses customize the product around their needs and matches Slack's flexibility.
  • Companies that want to use Teams for video calling around a set of speakers and displays now have two options: Microsoft Teams Meet Standard and Microsoft Teams Meet Premium, which both sound like something from Google's chat software marketing team.
  • Microsoft partners receive 1.5x their usual incentives for selling Teams to their customers, so expect this to continue to be a high-profile product for the company over the rest of the year.

Microsoft's partner relationships are one of its strongest advantages when it comes to fighting for the next wave of cloud business, as some of its oldest partners are catering to companies just now starting to think about taking the plunge. We'll get more details on its progress later today when it reports earnings.

This Week in Protocol

Roll 'em up: There's a balance in managing how employees access sensitive internal data: If you're too restrictive, employees can't do their jobs. But if you're too permissive, you set yourself up for a nightmare such as the one Twitter experienced last week, when one compromised employee led to Twitter losing control of its service for several hours.

Mark it up: I haven't written many stories in the last few years where the collective response from experts polled on a topic was basically: ¯\_(ツ)_/¯. But that's the response to Google's launch of the Open Usage Commons, ostensibly a neutral home for open-source trademarks that raised as many questions as it answered.

Level up: Cloud gaming services are interesting, but will take time to catch on thanks to the shoddy state of U.S. internet infrastructure. Microsoft plans to add its xCloud gaming service to its current Xbox subscription plan later this year, which analysts believe is mostly a clever way to sell cloud services to gaming companies.

Five Questions For...

Brad Freitag, CEO of Claris

What was your first tech job?

Sales at Oracle in the mid-'90s. There was no better place to cut your teeth in sales.

What's the best piece of advice you could give to someone starting their first tech job?

Stay curious, and be a consummate learner. Technology is constantly evolving, so it's important to stay ahead of the curve.

What has changed the most at your company over the past several months?

Agility at every level of the organization, manifest in remote work, product releases and responding to market changes.

What was the biggest reason for the success of cloud computing over the past decade?

The improved customer experience: rapid uptime, rich features and price consistency.

Will the pandemic usher in a new era of remote working, or will we all come back together when it is safe to do so?

Elements of remote work are here to stay, now that we have proven success. However, the need for human connection will motivate us to collaborate in person as soon as we are able.

Around the Cloud

  • IBM reported second-quarter revenue was down 5% and earnings down 31%. But the numbers were better than analysts had expected, so its stock … rose 6%. What a country.
  • Cloudflare suffered because of a typo in a networking configuration for a router on its network, which ended up taking out a large number of sites last Friday. Another reminder of how fragile the internet really is.
  • Hopefully LinkedIn throws in a free subscription to its premium product along with the severance paid to its 960 employees who are losing their jobs this week.
  • AWS settled a noncompete lawsuit aimed at preventing Brian Hall from joining Google Cloud, proving once again that it is willing to accept bad press in exchange for sending a message to employees.
  • Microsoft is working on a cloud-based PC service, the latest in a long line of attempts to make employees happy with thin clients and virtualized desktops.
  • Forbes had a nice rags-to-riches-to-rags enterprise software story, outlining how ScaleFactor blamed the pandemic for its abrupt ending when the real culprit was the fact that its AI-powered accounting software didn't work.
  • The Linux Foundation launched some open-source versions of contact tracing apps based on joint technology developed by Apple and Google, which barely anyone in the U.S. is using to track this ongoing disaster.
  • What does "cloud native" really mean?Silicon Angle took a stab at defining the thinking behind emerging software development practices designed around cloud computing.
  • Here's a smart post about cloud lock-in: Platypus-themed cloud soothsayer Corey Quinn argues that lots of companies worry about vendors locking them into technologies, but actual lock-in might be coming from inside the house.
  • Minecraft, as well as being up for the 2020 Babysitter of the Year award, has finally moved all of its workloads to parent company Microsoft's Azure cloud service, underscoring how long it can take to move the foundation of a service used as widely as Minecraft.

Thanks for reading — see you in two weeks.

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