Muglia on Google, Azure, and the future of Windows Server

Although he's presided over the expansion of Microsoft's server business, Bob Muglia is ready to help companies move away from that same server software.

Well, he is at least as long as those businesses are moving to the Microsoft cloud-based services that are replicating the software that, at one point, ran only in a company's own data center.

In an interview, the president of Microsoft's server and tools business talked about the shifts to the cloud, Google's role in the enterprise and the future of Microsoft's server products, including the next version of Windows Server, which he said will be a major update.

Here's an edited transcript of our conversation.

You mentioned that Microsoft is pretty much doing everything for the cloud first. Does that mean that over time on-premises customers are actually going to be getting technology that's somewhat older, for better and for worse?
Muglia: Well, I think the way to look at it is that we're able to use the cloud to do a lot more of our early validation than we've ever been able to do before. You know, you see us with labs, you know, Live Labs and things like that, being able to take ideas and put them up in the cloud. More and more what you'll see is the beginning of our beta processes will be run for new things up in the cloud, because our ability to get feedback from customers is so much more rapid if customers don't have to deploy the infrastructure themselves. So, there's a set of things that we can do, which will help to reduce our cycle time, and bringing new features to market.

I mean, in general our products run on two- to three-year cycles, and it very often takes customers at least that long to deploy them. I actually think the cloud will expedite customers' ability to get our software and our innovations, even if they run it themselves, because it will shorten our cycle for delivery, and also I think customers as they see these things available in the cloud will have a better understanding of the advantages they can get if they deploy it themselves. So, I actually don't think it slows down things at all for our customers that choose on-premises.

How much more will the next version of Windows Server resemble Azure?
Muglia: We're not talking a lot about the next version of Windows Server today, but I think what you'll see is... that the learnings that we have from Windows Azure will be pulled back into Windows Server, just like there's features in Windows Server and SQL Server that are being pulled up into Windows Azure and SQL Azure. (Windows Server head) Bill Laing works in (Azure development chief) Amitabh (Srivastava)'s group, and those guys are talking every day. So, there's a lot of cross-pollination.

We hear a lot about this term, private cloud, meaning taking a cloud-like infrastructure and deploying it in one's own data center, taking the idea of a public cloud and having a completely private version of that replicated in someone else's data center. I guess I'm kind of curious what are you hearing the most demand from customers for when they say private cloud.
Muglia: Well, you know, one of the things we've learned is that customers have different views of the term private cloud. And so what we've been talking about is customers' ability to build their own clouds in their own data centers or for partners to be able to build clouds.

But fundamentally we do see a great deal of demand for that, because customers have some very reasonable concerns about their ability to control the environment, and they often have security concerns. So, for many circumstances having a customer build their own cloud is what absolutely makes sense for them, and we're supplying them with the tools and products they need in the form of Windows Server, System Center, and SQL Server to build their own clouds.

Is the current version of Windows Server, is that well enough set up to do the private cloud or do you need something that more closely resembles Azure but can be used on-premises?
Muglia: Well, remember Windows Azure is designed to run at a scale of tens of thousands of servers. Really no customer is running at that kind of scale. So, there's definitely capabilities in Azure that are interesting, but frankly they go beyond what most customers -- really what all customers would need to build their own cloud and their own data center.

Windows Server and Hyper-V are very much structured to be able to build your own private cloud, absolutely. The area where we see probably the greatest set of evolution happening is in System Center, and let me give you some examples. We will evolve System Center to have capabilities like self-service so that departments, business units within an organization can provision their own instances of the cloud to really virtual machines within the cloud to run their own applications.

I know there's not too much you're going to say about the next version of Windows Server, but is it fair to say you guys are still on a major release, minor release cycle? So, that means we should be due for a major release the next time?
Muglia: There's no question we're due for a major release of Windows Server, no question.

Anything more you can say about it in terms of timing or features?
Muglia: No. The only thing I'll say is just like with Windows Server 2008 R2 and Windows 7, we worked on a common schedule and a common thing with our friends in the client team, and we're still doing that.

In your keynote you talked about both the responsibilities and the opportunities of the cloud. Certainly there's plenty of vendors out there that are bringing a lot of the capabilities of the cloud. How do you feel that Google and others are doing on the responsibility side of that equation?
Muglia: I think they have some things to learn about being an enterprise player. Google has clearly demonstrated a set of behaviors that have led enterprise customers to have concerns about, for example, will Google keep and maintain the privacy of information, of data that's put inside the Google cloud? I mean, Google has been very, they've been all over the map on that one.

We are now seeing major customers that had first gone with Google Apps switch off of that, of Google Apps, onto Microsoft. I think what we're seeing is both the fact that the Google products are so immature, and concerns about whether Google's focus on the consumer and some of the ways they treat the privacy and security of data, I think that's reflecting on a lot of concerns within the enterprise with Google.

I think the difference here is we've been serving the enterprise for 20 years, and we've learned a lot, and we've become a much more mature company in terms of working with enterprise customers. So, our approach here is more consistent with what their expectations are.

You know, we take our enterprise customers through our data centers all the time, and when we do that, their response is, wow, there's a lot that I could learn here, and I feel very secure trusting my information to Microsoft.

You know, all that said, there are quite a few customers that still want to run their own (servers), and that's fine, and we're the only vendor that provides both a global scale cloud and customers with the flexibility to run their own environment and their own data center.

Your message to the IT crowd was that collaboration and communication are the applications moving to the cloud first. When I look at the competition from Google, that's also where the competition is the strongest. Do you think we'll see a similar pattern where over time Google and other cloud players become significant competitors in sort of whatever app gets to the mainstream in the cloud?
Muglia: We'll have to see (which spaces) Google enters. I mean, I think that probably a category of app that will go quickly is CRM. I mean, that one we've already seen obviously. And I don't know if Google intends to move into that space at all. Obviously, real-time communication and things like that, they may or may not (enter). I mean, they're doing some things there, so that would not surprise me if they do something in that space.

But we'll see in given categories of apps, and of course one of our things with Windows Azure is to provide a very broad platform that enables all categories of apps to move to the cloud, certainly including those which we don't provide.

You said today that the PC is alive and well. I'm curious what gives you confidence that this is more than a short-term phenomenon and that ultimately the rise of the cloud won't mean not necessarily less-powerful clients but more generic clients?
Muglia: The reason I have great confidence is I am a believer--and have been for a long time--in a wide variety of devices. I like keyboards. I can't even imagine how that could go away. I mean, anyone who has tried to type anything in any length on a smartphone or use the iPad for any period of time knows that those devices are good for a certain set of things, but they don't have the breadth that a PC provides.

The world sells about 300 million PCs a year, and it's growing very rapidly. So, I think it is and remains a very strong category that we'll see in the years to come. I've watched the predictions of the death of the PC. You know, how many times have we heard this before? Who was the first guy to say it? Was it Larry (Ellison) or Scott (McNealy)? I don't remember. But we've heard this over time, and that was when the PC was selling at one tenth the volume that it sells at today.

One more screen question and then I'll jump back to the cloud. At TechEd (on Monday), you showed Windows Phone 7 again. How ready is it?
Muglia: Well, I think we feel very good about Windows Phone 7. You know, we've got a launch coming later this fall. The devices are planned trying to be out by Christmas time. And I think we feel really good.

You saw the phone today in that demo. It's responsive, it looks really good. We have a very unique and highly differentiated user interface. We have a phenomenal application development story with Visual Studio and Expression, far better than you'll find with any of our competitors. And we're pretty excited by what we'll see with the Windows Phone. You know, the proof will be in the devices obviously, but we feel really good about what's coming.

Can you give me a little bit of an update on Windows Azure, both the business and the technical side? I think you guys just passed the 10,000 customer level. Is there anything that's accounting for more of the business than you expected?
Muglia: No, I think it's still we're seeing a lot of different kinds of customer applications deployed in the environment, everything from internal apps that are being built for end users within a company to external Internet facing applications.

You know, we're seeing them be built across a wide variety of workloads, obviously a lot of Web applications being built, because that's a logical one, but we see other things like high-performance computing being of a great deal of interest, so we see a wide variety of workloads.

One of the things that we know that we have opportunities to continue to do is add more features. Basically every feature that you can find in Windows Server or SQL Server that's not in Windows Azure is on the list of things for us to consider bringing up to the cloud. Some things don't make sense, but the vast majority of things do. And so customers are asking us for things like reporting services in SQL Azure, which we're certainly doing, many, many other things like that.

From a business perspective, you know, it's obviously a still very small part of the Server & Tools business, but you look at what it's compared to with these multibillion-dollar businesses like SQL Server and Windows Server, and those things took a long time to actually become big businesses as well. One thing I can tell you is Azure will grow faster than these other businesses have traditionally done, because things move faster in the cloud.

On the technical side, how does Azure evolve? Is there like a version 2.0 of Azure or is it just a series of incremental improvements like what we've seen with the addition of Visual Studio support and so forth?
Muglia: We don't see versions, major versions in the cloud. It's a service, we're delivering it as a service. We will add new capabilities on an ongoing basis. We update Windows Azure frequently, as often as every few weeks, and sometimes we do major things which are major features like the size of the SQL Server database or .NET 4 support or, for example, spatial data support in SQL Azure. So, we add significant new features, but I don't think you'll ever see a version number shift in Windows Azure.

You guys have brought SQL up to work very closely with Azure. Are there other server-based products that there's similar demand like if I really want to build my Web-based apps I really need a cloud version of, I don't know, Excel or something else on the server side?
Muglia: That's interesting. I mean, obviously Excel is typically thought of as a client-based product, although one of the things we're doing in the next release of HPC Server, Windows HPC Server, is running Excel on the server. So, that's a great thing. We should probably do that in Windows Azure, and I even have a team that's focused on doing things like that. So, you know, it's an area where we don't have anything specific to announce, but good idea.

You can almost look at anything we do in the server space, you know, whether it's Windows Server, SQL Server, the AppFabric features that we talked about today, and you can be pretty assured that we've got a team looking at what it means to put that on Windows Azure.

Moving from the very top of your product line at HPC Servers to the smallest product, is Home Server still a part of your group?
Muglia: Absolutely. We've got a new version coming out later this year of Home Server. We have a new version of Small Business Server, and we even have a new version of Small Business that will be targeted at really focusing on connecting to cloud environments, so enabling small businesses to run their own networking environment, have their own server for things like file and print, but then getting other services such as e-mail and collaboration from the cloud -- which we think makes a ton of sense by the way. We'll continue to build the traditional Small Business Server, which runs Exchange locally, but as (Microsoft Online) continues to provide more and more capabilities at a more attractive price, we think there's tremendous opportunities for smaller businesses to utilize these cloud services, and we think they're some of the first move.

Home Server has been out for a while now, and there hasn't been a sort of major update yet in a while. You have taken some time to think about what is the right use case. I'm curious kind of how your thoughts on what the role of the Home Server is?
Muglia: Well, I think we're looking at continuing to make it simpler for people. One of the great things about Home Server is it's a general platform; it's a general server platform.

We're doing a lot of stuff in the next version to simplify the expansion of storage and simplify the way the client backup works, and make it easier to publish information out using your Home Server, connecting again to these cloud services. Those are all the sorts of things we're looking at.