Microsoft heads skyward
Microsoft's future, however, is now largely wedded to SaaS and PaaS in the public cloud. In March, CEO Steve Ballmer claimed that about 70 percent of Microsoft employees were "doing things that were entirely cloud-based, or cloud inspired" and that by sometime in 2011 it would be 90 percent.
Those claims seemed exaggerated at the time. But in October, Microsoft backed them up with the announcement of Office 365, which for the first time wrapped together a locally installed version of Office with Microsoft-hosted Exchange, SharePoint, and Lynx (formerly Office Communications) servers for a single per-seat subscription rate. When Office 365 is ready in 2011, you'll even be able to opt for a version that includes Office Web Apps and no locally installed version of Office whatsoever -- a 100 percent SaaS solution.
On the PaaS side, Microsoft is working hard to push cloud-based application development on its Azure platform in the public cloud.
First announced at the Microsoft PDC (Professional Developers Conference) in 2008, Windows Azure was late to market, becoming generally available in Feb. 2010.
It took center stage at this year's PDC; among other enhancements, Microsoft will make it easier for customers to migrate existing server applications to Azure.
But as InfoWorld's Woody Leonhard noted, there are big questions about Microsoft's ability to execute on its cloud strategy -- punctuated by the departure of its cloud maven, Ray Ozzie, in October. With the rationale growing ever thinner to upgrade to the latest version of Office (beyond 2007) and Windows (beyond Windows 7), there's little question that Microsoft desperately needs to make the transition. How that plays out in 2011 will be one of the major dramas of the year.
Putting the cloud in its place
Not long ago, wild predictions were made that the economies of scale afforded by cloud computing would result in huge swaths of business ceding their internal IT to public cloud services. Clearly, that's not going to happen anytime soon.
Without question, SaaS is rising by leaps and bounds, but it's important to keep that growth in perspective. SaaS accounted for 10 percent of the enterprise software market in 2009, according to Gartner, which predicts that slice will expand to 16 percent by 2014.
Certainly, there's less enthusiasm for simply moving infrastructure outside the firewall. For one thing, the pricing of IaaS lends itself to burst deployments, where customers upload big processing jobs to IaaS providers, so they don't have to provision their own servers for one-off jobs. Long-term arrangements end up costing customers more than buying and maintaining their own systems.
As for PaaS, it remains to be seen how many businesses will want to move their application development to the public cloud. So far, the Force.com platform has enjoyed the most momentum, although many of those development efforts appear to involve customizations of Salesforce's CRM application.
Ultimately, however, PaaS may hold the greatest promise of any aspect of the cloud. As cloud services proliferate, the ability to stitch them together on development platforms in the cloud will yield a whole new generation of interconnected, Internet-based applications.