Microsoft looks to rent Web "cloud" computing space

The launch of Windows Azure, with its logo shown on a screen, is announced by Chief Software Architect at Microsoft Ray Ozzie at the 2008 Microsoft Professional Developers Conference in Los Angeles October 27, 2008. Windows Azure is the cloud-based service foundation underlying its Azure Services Platform.

LOS ANGELES (Reuters) - Microsoft Corp took the wraps off a new computing service that allows companies to use its data centers to run their Web applications in a bid to become a player in the so-called "cloud computing" trend.

Ray Ozzie, Microsoft's chief software architect, said on Monday it will start previewing "Windows Azure," a platform that allows third-party Web developers to host, manage, calculate and store data for applications running on the Internet.

"It's a transformation of our software. It's a transformation of our strategy," Ozzie said at the Professional Developer's Conference, Microsoft's annual gathering of third-party engineers to detail the company's future plans.

Ozzie, who replaced Bill Gates as Microsoft's top software guru in 2006, is spearheading the company's push into "cloud computing," a trend that taps into computing power in distant data centers and delivers applications over the Internet.

Traditionally, software has run on a single computer's hard drive, but as Internet connections became faster and more reliable, companies started to deliver software as an online service by using the computing power of the "cloud," a network of powerful computer servers accessed over the Web.

The success of Web-based companies such as Google Inc and Salesforce.com Inc in creating online applications competitive with Microsoft has forced the company to embrace a new way of delivering and supporting software.

"TRANSFORMATION"

"We are in the early days of a transformation to services across the industry," said Ozzie at the conference.

Microsoft has worked to add online services elements to most of its traditional software, which required the company to invest billions in building massive data centers with thousands of computers servers and data storage systems.

Now, Microsoft wants to let other companies rent out its computing power so third-party developers can run applications over the Internet without the need for hefty investments in data centers. It also allows companies the flexibility to increase or decrease computing needs according to demand.

Similar to how its Windows operating system became the main platform for programs on personal computers, Microsoft aims to be the platform of choice for Web applications.

Amazon.com Inc and Salesforce is already in the market with computing services for Web developers, but Microsoft has a few advantages. It has deeper pockets, longer relationships with third-party developers and more expertise in building a software platform.

"I'd like to tip my hat to Jeff Bezos and Amazon," said Ozzie, referring to Amazon's chief executive. "All of us across the industry will stand on their shoulders."

Developers can write applications on Windows Azure using the tools and programing languages necessary to write software to run on top of the current Windows operating system.

Shares of Microsoft fell 75 cents, or 3.4 percent, to $21.21 in midday Nasdaq trading.

(Reporting by Daisuke Wakabayashi; Editing by Brian Moss)