Trending: Analysis: Seattle startup ecosystem poised for unprecedented acceleration of company creation
Microsoft corporate vice president Jason Zander, head of Azure engineering.
Microsoft corporate vice president Jason Zander, head of Azure engineering.

The cloud: It’s at the center of our lives, whether we know it or not.

It’s how we can pause a movie on the TV and pick up where we left off on our phones. It’s how we can play a video game, live, against someone on the other side of the world. And if you listen to the big tech companies, it’s completely changing the way businesses develop and deliver technology to their employees and customers — moving away from expensive servers in the backroom to scalable and powerful solutions and state-of-the-art data centers.

The cloud also comes with endless security and privacy implications, and of course it’s how the Terminator will someday launch the robot Armageddon.

The Seattle region is at the center of this transformation, with the two largest players in the industry, Amazon Web Services and Microsoft Azure, both based here, along with cloud operations of other tech giants like HP, Apple, Google, and countless startups.

GeekWire spoke this week with one of the key players in the cloud industry, Jason Zander, the longtime Microsoft executive who runs the Azure engineering team. We talked about the evolution of Azure, its rivalry with Amazon Web Services, Microsoft’s new cloud partnerships with some of its longtime archrivals, and where the Redmond company is trying to take its cloud platform next.

Listen below and continue reading for edited highlights from the conversation.

Todd Bishop: Give us a sense for the scope of Azure. People talk about the cloud, but what does it mean in real terms and in terms of Microsoft employment? How big is your team? How many data centers do you have out there? Tell us about Azure as a whole.

Jason Zander: Azure and the cloud for Microsoft has been something we’ve been working on for over a decade, actually. If you look at Xbox Live and Office 365 and those sorts of things, from a scope perspective we have thousands of people, full-time engineers working on the cloud. A bunch of those are in Azure at the core and at the base. From a data center perspective, we have 24 regions that are going to be live by the end of this year all over the world. In fact, over the last two days we announced the U.K. in addition to Germany, as well. So that will bring it up to 28 total.

Microsoft CEO Satya Nadella. (GeekWire File Photo)
Microsoft CEO Satya Nadella. (GeekWire File Photo)

Q: In the intro I alluded to the Seattle area being a real epicenter for this. I think the phrase that some people use is “cloud city.” Just recently, Satya Nadella, Microsoft’s CEO, who used to run the Azure business, said that it’s essentially a Seattle race at this point between Amazon and Microsoft. That leaves Google out of the race. Is that fair at this point? What kind of a competitor is Google and Google Cloud Platform?

Jason Zander: Certainly Google has a lot of cloud technology. They’ve obviously been doing this for quite a while. They got into it because of the search engine that they’ve done. Amazon got in because of retail. We got in because of all the Microsoft properties that we do, that people are familiar with and use every day. From that perspective, of course they’ve got good technology for what we call the hyperscale public cloud, which is massive — millions of machines and gigawatts of power and that kind of thing. We think there really are only two companies that are landing there. That is Amazon Web Services as well as Microsoft Azure. The cool thing is we’re only 15 miles apart from each other. But when I talk to a corporate executive, some people that are making their choice, they come up here. They visit us, they visit Amazon. By and large, they are making their decisions to go with one of us — or both of us, actually, in a lot of cases.

Q: Amazon is in many ways the clear leader. Especially in the startup and the web development world, people think of them first. They are also just brutal with their price cutting. They are willing to operate on the thinnest of profit margins based on their retail legacy. How do you compete with that?

Jason Zander: In our case, we actually do price matching with Amazon. Especially if you’re thinking about computing and storage, which are the basics of cloud, that’s where you get started. We match prices with Amazon, so no problems there. We’ve dropped our prices significantly as well. I think more and more a lot of the cloud conversations that I have are often moving away from price. Price was super interesting three years ago. It’s moving more to, what problems can you solve? Lately we’ve done things like Azure Media Streaming. We’ve streamed the Olympics and the Super Bowl, those sorts of things. We’ve also introduced Azure Machine Learning and advanced big data and analytics. We’ve also got Azure IoT Suite that we’ve had for quite a while, as well. We’re finding people are moving up into the solutions and away from necessarily just the building blocks. That’s the place where I think we have actually differentiated and put new offerings out even sooner.

Q: You mentioned the IoT Suite, Internet of Things. How much is that driving interest in the cloud in general and Azure in particular? This idea that there’s all these devices out there, all of them communicating somehow and they need to connect through the cloud?

Jason Zander: Yeah, it’s absolutely huge. And if you think about it, Microsoft has been working in the embedded space for over 15 years. A lot of the equipment that you see out there has been running on Windows and Windows Embedded in that kind of environment. When you come over the hyperscale cloud now you’re adding all this compute power. We’ve democratized some of the data and analytics components. The connectivity has gotten much, much better around the world so I think what you’re seeing is this inflection point of marrying the cloud plus this embedded environment together. It’s a huge change for a lot of businesses.

They are not traditionally software companies, but they are becoming software companies. One example I’ll give you is ThyssenKrupp, the elevator company. They’ve actually announced new products. They are all built on top of Azure. They are putting the units on top of elevator cars that track the health of those cars, the scheduling. They estimate they can save a significant amount of time. If you’re in the high-rise here in Seattle, how much time do you spend waiting for the elevator? Combining these two things together, I get better reliability, better service and as a user it’s a better experience. That’s just one example of maybe not a software company but they are borrowing software and making it better for the core business.

Q: With them, as an example, I’m not surprised that they are with Azure because I would assume that they are a legacy Windows customer. They probably had a big .NET development shop running their elevators at some point.

Jason Zander: It turns out no. What we did is we went back and worked with them to understand, what needs do you have? We knew that this was going to be something we want the companies to be able to accomplish. We spent the last couple of years with them, building this out and demonstrating what’s possible. Actually, it turns out that Azure itself is wide open and we have six versions of Linux that we run and a bunch of open source software, too.

Q: Obviously Amazon came out of e-commerce. They built AWS out of technology they had originally built for Microsoft is coming at this from your heritage of PC and server operating systems, it’s an outgrowth of that over the long term. How have those two histories shaped your respective approaches and how are you each different because of those different histories?

Jason Zander: Yeah and the other thing I would throw into the Microsoft history, as well, is obviously we have been delivering Office as a service for over 10 years. We’ve also had Bing, Xbox Live. Along the way we’ve also made acquisitions like Yammer and Skype. If you think about those, those were all designed to be cloud-based properties. Now, I combine that also with the background that we had, shipping a billion PC software updates for all of those, full connectivity, etc. You get a nice background and experience for that.

Q: Windows Update — just the whole idea of checking to see if your PC is up to date and downloading the latest patches.

Jason Zander: Moving those bits around, keeping everything up to date. Updating software and that kind of stuff, that’s absolutely a great history from the Windows side. Like I mentioned, the first-party Microsoft services that we have as well are all designed around the hyperscale. Look, we have over 500 million users today that are already registered with Active Directory. This is one example.

Q: Are there things about your history that make your approach different than what Amazon does, based on its history in e-commerce?

Jason Zander: Yeah, I think absolutely. There absolutely are. If you look at the enterprise products that we’ve been building for a long time, then we’ve been building server operating systems in addition to, of course, Windows for my PC and for my phone. That also includes running software in data centers for a very, very long time. For example, one of the things that’s first class for us is the notion of hybrid computing where I’m going to combine both private data centers as well as the public data centers and put those two things together. That definitely speaks to part of our history.

Q: Amazon vs. Microsoft, just to round this out — give me a sense for the intensity of your rivalry with these guys. Is it like Yankees vs. Red Sox or more like Seahawks-49ers? Where are you on the spectrum?

Jason Zander: I would say Seahawks-49ers, although I think the Niners are having a hard time this year. There is a good friendly rivalry here. I think it’s actually good for customers, frankly, because it means that both of us are working incredibly hard to add new functionality, expand the regions, make sure people have what they want. I think that’s actually good for our users but yeah we’re definitely in a very heated competition.

Q: If you guys read that New York Times piece, Jeff Bezos called Microsoft a country club. Did that sting a little bit?

Jason Zander: Yeah, I’ve been at Microsoft for 23 years, man. I don’t know what country club he’s referring to. I don’t work in a country club. I have friends that work in Amazon and a lot of former Microsoft employees are there and vice versa, people who’ve come back. So from that perspective, it’s engineer to engineer. But yeah, I like the competition.

Q: Speaking of rivalries like Amazon and Microsoft, companies like Red Hat and Salesforce and Oracle used to be archrivals of Microsoft, but this has totally changed. They are your partners now. Developers can use all sorts of open source technologies on Azure. Satya Nadella, the new CEO, put up a slide that said, “Microsoft hearts Linux.” I mean, that was not the way it was in the past. Holy cow, what’s happened? What’s changed?

Jason Zander: I would say at the top level as a company, we are trying to transform or trying to move into a new era. We really need to look at what our customers want, what they need. The truth is we’ve always done some level of partnering even with our competition. We’ve had Windows Server and a lot of this enterprise software run on top of Windows Server. That part is certainly true, but if you look at things like moving Office onto the iPad and making that available, that’s certainly a big change. Yes, having a CEO from Microsoft say that they heart Linux and we now have six distributions on top of that. I think really the reality of this is, in the public cloud I want to run my applications, I want to run my workloads, and I have built it on top of a big combination of software. Some of it is Microsoft, and some of it belongs to people we otherwise compete with. I think we have a mutual interest with those partners to make sure that our customers get the software that they want. We’re definitely working hard on all the partnerships.

File Photo: Microsoft’s Satya Nadella and Salesforce’s Marc Benioff announce a partnership.
File Photo: Microsoft’s Satya Nadella and Salesforce’s Marc Benioff.

Q: Has it ever reached any awkward moments with these guys like Larry Ellison or Marc Benioff, where they might bring up past wrongs? Have there ever been any awkward moments like that?

Jason Zander: You have to make sure you go through the trust building. Why are we doing this, what’s our motivation? I see Microsoft today as a different company than it was 10, 15 years ago. As a longtime employee, I’m proud that were able to make those changes. Actually, some of the stuff we did start under Steve (Ballmer) when he was CEO and I think Satya has really tried to propel that and keep those going through. In general, once you get through those initial conversations, we talk about the value for our mutual customers. We just announced Red Hat last week and one of the things that Red Hat pointed out is that 90 percent of their customers are also Microsoft customers. There’s a 90 percent overlap between the two of us. I think having us all come together and meet those requirements, that’s super important.

Q: From a business perspective, as well, we were talking about some of the numbers at the beginning to give folks a sense for the scale, but just recently Microsoft reported that for its commercial cloud overall, the business is on an $8 billion annual run rate.

Jason Zander: We’ve had multiple consecutive years of triple-digit growth, which is really amazing, actually.

Q: OK. What’s driving that? Is it people shifting from old servers and old forms of computing to the cloud? Is it new customers coming in?

Jason Zander: It’s a combination of both. Our Microsoft cloud includes Office 365, all the Office applications and email, Dynamics and CRM, as well as Azure, which is the core infrastructure that a lot of us software geeks wind up building on top of — you’ve got a lot of people that are moving over to software-as-a-service, that’s Office 365. There’s a lot of new business there. I also think that as people are trying to get control of their costs, then moving to the public cloud is actually a great way to go after that. We’re seeing a combination of people trying to modernize and save money, but move faster.

Q: When Azure was first released under Ray Ozzie it seemed like it was heavily focused on Windows developers. It was probably a little more confusing to IT shops, the traditional IT shops, and over the past few years it seems like there’s been this switch to more practical infrastructure services like virtual machines, DNS, cache, load balancers, things along those lines, and the ease of use of the platform has also gone up dramatically, from what we hear from developers. Can you give a sense for the evolution of Azure over the past few years and then where you’re headed from here?

Jason Zander: One of the things that we originally started with Azure was to shoot for what’s often times called platform-as-a-service. Like, don’t worry about the operating system. I just want to go write an application and go launch it. We are seeing absolutely huge adoption of that and it’s a great place to go. The big problem that we had is by skipping over the infrastructure as a service, it meant that if I have existing workloads I can’t actually bring those to the cloud. One of the key things that we actually added to the system, probably about 2 and a half years ago, we did go back and add infrastructure as a service. As you mentioned the core virtual machines, the core networking infrastructure and those components.

That allowed me to take existing workloads that I was running in my own data center and actually move those into the public cloud. That has been huge for us because that means that I don’t have to go rewrite or build brand new applications. We now have that and then of course we still had this awesome asset that Ray and the rest of the team had built which is the platform as a service. I think as you start looking potentially for the developer audience — things like containers and the new workloads that are getting created, they are absolutely built and designed more towards that kind of a vector. I think we’ve probably got a little bit too far ahead of ourselves there in the first round.

Microsoft executive Scott Guthrie.
Microsoft executive Scott Guthrie.

Q: I’ve heard a story about when Scott Guthrie initially took over the Azure team back in 2011. He took the execs to an off-site meeting and asked them to complete some very basic tasks in Azure. Good, you’re nodding your head. No one could figure it out. The meeting was basically an impetus to become much more practical and to make things much more user friendly. Is that accurate and how have you guys made that transformation?

Jason Zander: Yeah, I know it’s absolutely true. About three years ago both Scott and I moved over to report to Satya who was leading the enterprise business at the time. Scott was running program management and I had the developers on there. Yes, Scott organized this awesome two-day off-site. It was simple things like, “OK, guys.” Actually, we’re brand new to the Azure team. Both of us. And so we took the existing team. We sat down and said, “OK. We’re just going to do something simple. I want you to sign up for an account today, build an application and deploy it.” It was painful. Even for the team that was building it — and to be fair to the team what had happened is they’d done an awesome job building out this really heavy plumbing and infrastructure. Real rocket science kind of stuff. But we hadn’t done enough on the front end part. What’s the portal, the sign up experience and that kind of stuff? That was one of the first things we went back to and said, “OK, great. We really need to think about this completely end-to-end.” The rocket science is hard but it’s also got to be easy to get up and running.

At this point, I think we’ve done a significant amount of work in that. Both Scott and I came from the developer space. We did Visual Studio, we did .NET, different parts of it. That was always designed to how do we make this hard task easy. I think what we’ve been trying to do is bring a lot of those things that worked well on that space and then bring it to bear on top of the cloud. We’re getting a lot of really great feedback on that.

Q: Looking forward, what are the biggest challenges ahead and the biggest goals that you have in terms of pushing Azure forward? What are the big things on the horizon?

Jason Zander: The big things for me inside of the team where you’re experiencing massive, massive growth — just to give you one example we went from 20 trillion with a T, storage objects in the system up to 70 trillion. That was just in 10 months. It’s an exponential growth curve, which is great. It means that we’re getting a lot of customers super-interested, so we’re doing a lot of work around how we bring on capacity and make it go really, really fast and be able to meet all the demand. If I start looking then at what our customers are looking for, we’re also expanding off into these new areas. We have, for example, Azure Machine Learning, Azure IoT. These are new areas that people are really just at the front level of engagement on. There’s lots of us that have been doing some of these things for quite a while but a lot of people are now starting to discover and figure out how that works. We want to bring a lot of that innovation into the market as fast as possible and help our customers be really successful. So there’s a lot of new work like that that’s being done.

Listen to the entire interview with Microsoft’s Jason Zander above or on Soundcloud.

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