Facing threat from competitors, Microsoft spells out cloud plans

Hoping to lure more corporate users to its cloud environment, Microsoft will offer discounts on its Azure cloud services starting November 1 to all those who have signed enterprise agreements.

Microsoft is specifically targeting companies that are interested in building hybrid clouds that tie together on-premises and hosted environments. Company officials, who gave no indication how steep the discounts would be, said there would be no upfront commitments or overuse penalties and would offer more flexibility in terms of annual payments.

"It's not clear to me how much price elasticity is left in this space. We are at a point where those who want to embrace [the cloud already have]. This strikes me as a move to try and stimulate sales as opposed to feedback from customers that are saying, "if you do this then we will buy more,'" said Mark Eisenberg, Boston-based technical consultant specializing in cloud environments.

While some IT shops are encouraged by lower costs for Azure-based web services, some believe Microsoft could raise the price on those services after they have already fully committed to the environment.

"IT people are going to ask, 'Well you give me an attractive price point today, but once I am locked in (to an Enterprise Agreement), are you going to come up with a new, higher price?'" said Mike Drips, a systems administrator with WiPro Inc. in Houston, Texas.

Two of the fundamental reasons for moving to a cloud environment such as Azure, Drips notes, is the opportunity to either reduce IT staff or eliminate servers, not a decision that is often made lightly.

"So if I get rid of some people and servers and make the move to go to the cloud well, what do I do then? If I get unhappy with higher prices it would not be an easy transition off (Azure) to migrate to someone else. There's got to be a healthy dose of fear in IT about that," Drips said.