Microsoft: Diving deeper into the cloud

Friday, December 9, 2011

Microsoft has opened a new Brazilian datacenter, said to be dedicated totally to operations of the newly launched Office 365 cloud-based platform.

While highlighting the increasing importance of Brazil's operations to the computing giant, the opening also reflects the desire for Microsoft - a traditional licensing and software company - to move further into the cloud.

And there is more to come, as some 90% of Microsoft’s researchers are fully devoted to developing cloud solutions.

To find out more about that operation with Office 365 and the company’s cloud strategies, BNamericas spoke with Microsoft's general manager in Brazil for Office products, Eduardo Campos.

BNamericas: You've recently opened a data center in Brazil following the release of Office 365. How are operations there and what was the strategic reasoning behind such a decision?

Campos: The strategic analysis behind the opening has to do with the position and size of Brazil and the country's importance to Microsoft's regional strategy. Cloud computing solutions fit perfectly into the local culture - strongly rooted in services, pay as-you-consume, customization. When you start, you pay little, and as the use increases you expend a bit more also. I think that's what sums up this strategy.

BNamericas: How are operations going?

Campos: Operations are pretty good, although I can't go into much detail for strategic and security reasons. But we've seen that in the Brazil data center, we provide a very strong gain in speed when compared with the previous generation, which was hosted abroad.

BNamericas: Office 365 is considered a platform aimed more toward SMEs. How much of your business is actually with this niche of the market, and where do you intend to go?

Campos: Office 365 is a productivity solution for enterprises of all sizes. However, for SMEs adoption is simpler and has been happening at a faster pace, mainly because, in general, most of these companies don't have an IT area. So in a very quick way they can subscribe to and get this service with virtually no intervention from technicians.

As for large companies, the picture is a little different. In the first place, because they already have an installed base, they have to live with a legacy that's there; the technology area has to support this... We see, though, that security policies are already evolving to allow companies to use cloud computing, and we've been noting that many companies opt for a hybrid model, combining the best of traditional uses for the software within the company with other parts used in the cloud.

There's a greater penetration [in SMEs] because it brings to small businesses the democratization of access to technologies that previously only large companies could have. You pay as you use, you pay every month. And when we compare the rates with the previous generation... we see Office 365 is coming in fast worldwide. But I think more time is needed for us to see how things unfold around here, in order to reach the world penetration average.

BNamericas: How much of these operations are being carried out through channels, and how much is being handled directly by Microsoft?

Campos: There's a balance between direct sales and partner sales. We have a good amount of companies working with us and covering the whole country. We're in every state. Currently, we have about 800 partners in Brazil trained to deploy Office 365.

And we also have a considerable chunk of direct sales to professionals. Imagine the scenario for a freelance journalist, with a company of his own, providing his own services. He can use his credit card and, starting at US$6 a month, have access to e-mail, connection with mobile, storage, calendar, etc - everything on the web, without the need of any server or software installed.

BNamericas: And what are the expectations in terms of revenues for Office 365 in Brazil?

Campos: Unfortunately, I cannot disclose expected revenues, but I can tell you that we see a unique opportunity in the Brazilian market, a potential of over 50mn users.

It's a market where most companies use free e-mail solutions, which are not suited to business needs. But now they can count on a low-cost, high-tech and accessible product 365 days a year.

BNamericas: How would you analyze Microsoft's approach toward the cloud, which Office 365 is part of?

Campos: Microsoft has had a strong commitment to cloud computing for something like 15 years. In the last three years, however, that integration and development of new solutions and products to the cloud dramatically accelerated within the company, where now more than 90% of our engineers work on cloud projects.

There's no doubt for us that the future of our platform and our services is the cloud, and the trend is that new products being launched and updated, have increasingly more integration with the world of cloud computing.

BNamericas: Which would you say are the main markets for Office 365 in Latin America, other than Brazil?

Campos: I think in the case of Office 365, our potential markets are, naturally, the larger countries with greater opportunity and consumption power... However, one of the coolest things with this product is that it allows us to take technology to places and countries where we couldn't get before.

There are several scenarios in which companies started to provide employees with e-mail and access to similar services - employees who previously didn't even have a PC.

And when we look to Latin America, there are countries where per capita income is lower than that of Brazil and Mexico, or have a different economic reality than Brazil or Mexico, to which now we can bring technology at a lower and customized cost.

BNamericas: What are the growth outlooks and focus for this year and next?

Campos: What I can say is that our focus is, at this point, in two spheres. First, we already have a considerable installed base of customers who have adopted the first generation of our cloud computing services, which is as BPOS [Business Productivity Online Services]. And Brazil was the second largest country in the world in adopting these tools.

So our number one priority is to ensure that these companies transition to the next generation at the beginning of next year. And this process should take about a year to fully come through.

And our second priority is to ensure the product's acceptance, from the explanation and demystification of the cloud computing concept, so that the client understands what we're talking about. It's a powerful technological paradigm shift, so it takes time to explain and make clear the benefits of such adoptions.

About Eduardo Campos

Eduardo Campos de Oliveira has been general manager for Microsoft Office Brazil since 2008. Having worked for 17 years in the technology industry, the executive has been with Microsoft since 2000, where he has held several positions.

Campos has a degree in data processing from Fatec-SP and a master's in marketing from Escola Superior de Propaganda e Marketing (ESPM). Prior to Microsoft, he worked for seven years in the financial department of BankBoston.

About the company

Founded in 1989, Microsoft Brasil is one of Microsoft Corporation's 109 global subsidiaries. It has 14 offices across the country and generates local direct tech business for more than 18,000 companies and 495,000 professionals.

Over the past eight years, the company has invested some US$134mn in social projects.