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Microsoft (Nasdaq: MSFT) announced plans Monday at the Professional Developers Conference in Los Angeles to launch a large-scale cloud computing initiative that could drastically change the way it develops and sells software.
Cloud computing, an emerging trend in the technology industry, employs vast computer and server networks to deliver and host applications and store massive amounts of data.
The advantage to cloud computing is that -- theoretically, anyway -- businesses don't have to invest heavily in their own PC, server and data-storage networks. Instead, they rent capacity from large companies like Microsoft, Amazon.com (Nasdaq: AMZN) and Google (Nasdaq: GOOG), which already have huge computing infrastructures in place.
One advantage for Microsoft, or so the company hopes, is a new revenue channel that takes advantage of the billions it's invested in a global IT infrastructure.
A Bid to Gain Developer Support
More than anything, though, Microsoft's announcement Monday appears to be a developer-centric move.
"What [Microsoft] announced today is more about enabling developers to create applications that will run or be hosted in the cloud," Sid Parakh, an equity analyst at McAdams Wright Ragen, told TechNewsWorld.
Developing a cloud computing strategy 
is vital to Microsoft's future, Parakh said.
"It's crucial to be able to offer all the different modes of [software] delivery to your customers," he said.
Along with companies like Oracle (Nasdaq: ORCL) and SAP (NYSE: SAP), Microsoft dominates the traditional enterprise software model: large deployments of heavy-duty software on corporate networks that encompass big pools of PCs, servers and mobile devices.
Microsoft is also a significant player in the Software as a Service space. The SaaS model lets customers access software applications via an Internet browser, usually for a flat subscription fee.
Cloud computing is more like the model used by electrical utilities, in which customers pay for the capacity they use on a network.
Gaining support from applications developers is critical so that companies like Microsoft have a wide variety of applications and services to offer customers via the cloud computing model.
Cloud Services
Microsoft announced several cloud computing technologies on Monday.
At the top of the food chain is Windows Azure, the software architecture that runs in Microsoft's data centers, Rob Helm, research director at Directions on Microsoft, told TechNewsWorld.
There are also utility services to help developers write different types of applications, such as database management systems for the purpose of storing large amounts of data on a network. Another such utility service might be one that enables application-to-application communication and data sharing.
"It's Windows plus some additional utilities for management," Helm said.
The Azure Services Platform offers data storage services, coordinates application usage, and synchronizes data between Microsoft's data centers, local computers and remote or mobile devices.
Just One Cloud Player
Cloud computing is still in it infancy, and several players have emerged, including Amazon.com, search engine powerhouse Google and Salesforce.com (NYSE: CRM), which makes customer relationship management software that its customers access via the Web.
"It's still pretty early days," Helm said, noting that Amazon just officially launched its cloud computing service last week.
Other players with significant shares of the server business are also in a position to jump into the fray.
"IBM does a lot of hosting, but a lot of what it's doing is more customized," Helm noted, while "HP and Dell (Nasdaq: DELL) are all systems integrators."
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