What is Microsoft's cloud and why do the new economics of Microsoft's cloud make sense for businesses today

1. Economics of the cloud Slide 1 Michel N’Guettia Business Group Lead micheln@microsoft.com

2. TransformatiE van IT Today | Cloud 2000s | Web 1990s | Client / Server 1970s and 80s | Mainframe

3. HOW MICROSOFT VIEWS THE CLOUD Nieuwe Principe's Hoge beschikbaarheid Betalen naar gebruik Schaalbaarheid Multi-tenancy Keuze Locatie On premises Off premises Infrastructuur Heterogeneen Homogeneen OpEx CapEx Business model Lease/Rented Koop Eigendom 3e partij Zelf Management

4. Supply side economics of scale Larger datacenters have almost 50% lower TCO per server ANNUAL TCO/SERVER DECLINES W/SCALE MAIN DATA CENTER COST BUCKETS Server hardware costs (~45%) Facility & operations (~25%) Hardware labor costs (~15%) Power costs (~15%) 47% Savings

5. De Microsoft Cloud

6. De Microsoft Cloud Microsoft has more than 10 and less than 100 DCs worldwide Amsterdam Dublin Chicago Quincy Japan Hong Kong Boydton Des Moines San Antonio Singapore Multiple global CDN locations "Datacenters have become as vital to the functioning of society as power stations." The Economist

7. Sustainable economics Improved Efficiency  Energy savings and Sustainable Environment Reduced TCO for supply of cloud services Relentless focus on PUE reduction Lower cost passed on to customers Competitive Advantage Less Raw Materials Less Wasted Power Less Idle Equipment Less e-Waste Less Carbon Less Empty Space Satisfied Customers PUE Ojective: 1.125

8. shift to ultra-modularity Pre-manufacture the entire datacenter Low initial capital investment ITPAC  Modular Server Building Block Airside Economization PAC with adiabatic cooling Extremely efficient  PUE of 1.05 - 1.2 400 to 2500 servers at a time

9. DEMAND SIDE ECONOMIES OF SCALE Average server utilization rates are 5-10%

10. UNCERTAIN GROWTH Uncertainty about future demand requires overprovisioning of resources. Pooling uncertainty dramatically reduces this inefficiency Server Demand Overprovisioning

12. Instances separately administrated

13. Dedicated resources

14. Costs grow with scaleAdmins Admins Resources Resources Resources Admins

16. One group of administrators

17. Fixed resources are shared

18. Costs go towards zero with scaleResources Resources Resources Admins Admins Admins

19. Cloud operating system Multi-tenant Cloud OS Developer ExperienceUse existing skills and tools Relational data Management Compute Storage Flexible APIs Data Market Marketplace Connectivity Access control Management Information Marketplace Reporting & BI Billing & Payments Marketplace Infrastructure Data Management Connectivity

20. PUBLIC vs. PRIVATE CLOUDS CLOUD SCALE BENEFIT 40x cost benefit for SMBs Private Cloud Public Cloud 10x cost benefitfor Enterprises Public Cloud Cost at Scale

21. Service models Service Categories (On-Premise) Infrastructure (as a Service) Platform (as a Service) Software (as a Service) You manage You manage Applications Applications Applications Applications Data Data Data Data Managed by vendor Runtime Runtime Runtime Runtime Managed by vendor You manage Middleware Middleware Middleware Middleware Managed by vendor O/S O/S O/S O/S Virtualization Virtualization Virtualization Virtualization Servers Servers Servers Servers Storage Storage Storage Storage Networking Networking Networking Networking Lower Cost & Higher Agility Higher Control & Higher Cost

22. PLATFORM BUSINESS USERS BUSINESS APPS CLOUD SERVICES BUSINESS APPS COLLABORATION COMMUNICATIONS IDENTITY DESKTOP MGMT PLATFORM DATABASE PRODUCTIVITY ON-PREMISES & HOSTERS CLOUD SERVICES FOR BUSINESSES

23. The Value of Cloud Computing Source: http://www.mckinseyquarterly.com/Business_Technology/BT_Strategy/How_IT_is_managing_new_demands_McKinsey_Global_Survey_results_2702?gp=1

24. THE HORSELESS CARRIAGE SYNDROME

25. THE HORSELESS CARRIAGE SYNDROME "If I had asked my customers what they wanted, they would have said a faster horse." Customers - Henry Ford “The horse is here to stay but the automobile is only a novelty, a fad.” Analysts - Bank analyst …designed whip holders into the automobiles for the first 6-7 years, even though there was no horse… Engineers “There will never be more than 1 million units because of the limited availability of good drivers” Forecasters - Daimler Company (there were 8 million by 1918, over 600 million today)

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27. DEMAND SIDE Economies of scale Time of Day Variance Query Volume