On Microsoft and the Lack of Startup Cred

The recent domain profiling of Y Combinator startups was interesting reading from a “how far ahead of corporate IT are startups when it comes to cloud services?” question, but also interesting was a look at Microsoft‘s performance among the companies. Startups are cool right? And large technology companies want to be seen as cozying up to the col kids right? Which is why the results will be worrying for Microsoft. Search for either Microsoft or Azure through the email and web hosting results and what do you see? Zip, Nada, Nothing. This is especially worrying for a company whoe CEP recently famously stated that they’re “all in” when it comes to the cloud.

There’s a really interesting discussion taking place on Quora about this, but the key points are:

  • Microsoft rules the roost in most Fortune 500 companies and is the “safe bet” by default, but very few entrepreneurial-minded technologists like working with Microsoft technology for a lot of reasons
  • Microsoft made it extra hard for students and small startups to use their technology. Everyone is able to create a new app on Heroku in about 5 minutes and it is free. On Azure you have to spend at least ~40 usd per site per month or join bizspark to be able to use it and it takes forever to sign up
  • Costs: Azure is priced in a way that fits a Corporate America that want’s to streamline it’s operation. It can get very expensive very fast for startups

No of course it’s not quite as cut and dried as that and we need to give some context to this debate. In the email hosting category, it’s safe to say that the vast majority of Y Combinator startups will be using some kind of SaaS email solutions rather than an on-premise setup. That being the case we need to look at the significant headstart that Google has with Gmail. True Microsoft has its BPOS email product but it’s got far less attention than Gmail and is also nto as startup friendly (given that Gmail is packaged as part of a total office productivity suite).

On the web hosting side, things become even more complex. A large proportion of startups prefer to use opensource and linux based systems – clearly Microsoft’s more proprietary approach gives a perceived or actual lack of flexibility that is anathema to startups, But digging deeper, it’s clear from the survey results that these developer-led startups want to utilize raw hardware – Microsoft Azure is a PaaS solution and hence, while it has a significantly greater feature set than, for example, AWS, it also creates more lock in. As one commenter on Quora said;

Microsoft Azure is a Platform as a Service (PaaS) and unlike Amazon EC2 is not an Infrastructure as a Service (IaaS). The problem with PaaS providers is that you are tied down to a specific platform and it’s almost always impossible to maintain a certain amount of portability (which you’d need just in case you want to move away). If you are on Amazon EC2, for example, your platform is a vanilla Linux or Windows OS and you can potentially move to any hosting provider in the future (for example Rackspace).

Two valid explanations for he lack of Microsoft. And given the massive market share in corporate IT that Microsoft enjoys, should they really be worried about a few young developers working out of garages around the place? Well.. remember when these guys worked out of a (metaphoric) garage?

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