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Microsoft executive Scott Guthrie. (GeekWire File Photo)
Microsoft executive Scott Guthrie. (GeekWire File Photo)

Microsoft registered a “takeout” against Salesforce when it won a six-year contract yesterday to provide Dynamics CRM to HP Inc., said Scott Guthrie, Microsoft’s executive VP of cloud and enterprise, in an on-stage interview at the Deutsche Bank technology conference today.

HP Inc. “is a very large Salesforce shop — or they were until yesterday,” Guthrie said. “It was a Salesforce takeout. HP Inc. is planning a massive migration and a big bet on Dynamics. It’s one of the more public (wins) we’ve had.”

HP will use Microsoft’s customer-relations management service for its direct sales and to track partnerships, said HP Chief Operating Office Jon Flaxman yesterday. Although Microsoft and Salesforce last year deepened their partnership in the cloud, the competition for the HP business highlights the fact that they are still competitors on many fronts.

Guthrie spoke for about 45 minutes on a broad range of topics, including the Azure cloud service, Microsoft’s server business and Dynamics CRM.

He said he views the public-cloud arena as “essentially a two-horse race” between Microsoft and Amazon Web Services. As to Google, “its struggle is the lack of enterprise capability. Their infrastructure is optimized for search. They have four regions, versus our 34. It doesn’t necessarily offer a human on the other end of the phone when it gives support. That ends up being a non-starter. So I think they’ll struggle over the next couple of years.”

Azure and AWS are “definitely in an arms race, which is kind of funny because we can almost see each other across the lake (Lake Washington),” Guthrie said. “We’re number two and aspire to be number one. Sometimes it’s a matter of features. And we focus on hybrid, which is probably our biggest differentiator — the ability to build apps and run them not just in our cloud but in your data center or one across the street. If you use any of the AWS services, you can use them only in AWS, not in Azure or on-premises. That appeals to enterprises and the independent software vendors targeting enterprises, which is the center of our bullseye.”

Microsoft’s $19-billion on-premises server business, which Guthrie also runs, has been holding its own despite the growth of Azure and Office 365. Other tech companies’ server businesses have not weathered the cloud shift as well.

“Again, the hybrid story really resonates with customers,” Guthrie said. “It’s our ability to say, ‘You can buy that database and use it in your own data center, you can lift it and put it in our data center and not paying anything extra, or you can use it in our data center as a service, and have the same data API and capabilities in all three capabilities.’ That’s something other database vendors haven’t been able to offer.”

[Editor’s Note: Salesforce is a GeekWire annual sponsor.]

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