Tech - MS,Google & Cloud Computing

Peter Burrows

Corporate America is increasingly leaving computing to the experts. Why go to the trouble and expense of building and managing complex systems to handle your spiraling data-crunching needs when another company can do it for you? And who better, faster, or cheaper than Google (GOOG)?

That's just the kind of conventional wisdom Debra Chrapaty wants to change. As Microsoft's (MSFT) vice-president for Global Foundation Services, Chrapaty wants to prove that her company is capable of running the sprawling data centers to offer software doled out via the Internet. The company is especially keen to handle the ubiquitous Microsoft software that consumers and corporations have been running for themselves for the past few decades. "Google has done a great job of hyping" its prowess, Chrapaty says. "But we're neck and neck with them."

And if Microsoft isn't there yet, it may be soon. Chrapaty, who's in charge of Microsoft's data centers, is stepping up a multibillion-dollar building binge, BusinessWeek has learned. Her group is embarking on a plan to build in the coming years some 20 supersize data centers that can cost as much as $1 billion apiece, according to a person familiar with Microsoft's plans. "We're going to reinvent the infrastructure of our industry," Chrapaty says. She declines to discuss specifics of the plan.

Google's Got a Head Start
The moves are designed to support what Microsoft describes as the biggest strategic shift since it first targeted the Internet in the mid-1990s. The company has unveiled a range of offerings in recent weeks that embrace what's come to be known as "cloud computing." There's Azure, a new operating system that lets companies run software either on their own computers or as a service delivered via the Internet by Microsoft. There's a new Windows Live offering that lets consumers store, retrieve, and share photos, blogs, and other Web content with friends. And Microsoft has announced an Internet version of its Exchange corporate e-mail, and plans to do the same with its Office software. If Chrapaty's group can't handle the load, many customers may decide to forgo Microsoft's products in favor of rival cloud computing services.

Traditionally, Google has positioned itself as the leader. "We've been designing infrastructure for the cloud for years," says Matt Glotzbach, a manager who works on Google Apps for corporations. "We've got a pretty big head start vs. a company like Microsoft."

Tapping into Cheap Energy
Still, Microsoft can hold its own, says Gartner (IT) analyst David Cappuccio. "Microsoft may certainly be just as good" in areas such as energy efficiency, Cappuccio says. And amid the global economic malaise, cash-rich Microsoft and Google are alone in being able to "throw several billion dollars into something like this," says Matt Rosoff, an analyst at Directions on Microsoft.

Microsoft's bold data center strategy dates back at least five years. Before that, the company relied heavily on other hosting companies to do the work. Soon after the arrival of Chrapaty, a former chief technology officer for the NBA, Microsoft decided to bring the job in-house. When in 2005 Ray Ozzie persuaded Microsoft founder Bill Gates and CEO Steve Ballmer to make the move to online delivery of software in 2005, running data centers became even more important. Chrapaty began bringing in industry luminaries from companies including Hewlett-Packard (HPQ) and Intel (INTC).

Chrapaty's group has been in overdrive ever since. In 2007 it opened a massive facility in the rural town of Quincy, Wash., to tap into cheap energy courtesy of the nearby Grand Coulee Dam, right around the time Google did the same thing. Later, it opened a facility in San Antonio, completing much of the work in just nine months, achieving Chrapaty's goal of opening the center in less time than it took a local cowboy boot company to deliver the custom-made boots ordered for her by city officials.

Shipping Containers Full of Servers
Microsoft's newest facility is drawing lots of oohs and ahs from experts in this specialized field. Most data centers are open, warehouse-style buildings filled with racks of gear. But the first floor of this vast 700,000-square-foot facility looks more like an indoor parking lot, with gear packed into preconfigured shipping containers. Suppliers such as Sun Microsystems (JAVA) and Rackable Systems (RACK) have been advocating similar approaches for years, but this is by far the most ambitious implementation. Each of the containers can hold 2,500 servers, and the floor can hold up to 224 containers. That's a potential maximum of 560,000 servers. "They're pushing the concept to the extreme," Cappuccio says.

There's a method to Microsoft's modular approach. Rather than spend hundreds of hours opening server boxes, and connecting them with cables and loading them with software, Microsoft can roll in a container in just a couple of days. The hope is to run the facility with half as many people as at its previous sites. Even better, it's easier to monitor and whisk away heat generated in these confined modules than cooling an entire building. One source says Microsoft hopes the design will help cut by one-third the power bills that typically take up some 40% of a site's operating cost.

Theoretically, Microsoft should have an advantage over Google in doling out cloud services for corporations, given its long history of developing reliable, feature-rich software. "Microsoft understands the issues with serving corporations a lot better than Google does," Cappuccio says.

Microsoft Shares with Dell
By the same token, it often takes Microsoft multiple tries to achieve its strategic goals, including its assault on corporate server sales in the early 1990s. And despite years of trying, Microsoft has yet to come anywhere near replicating Google's successes in the lucrative field of Internet advertising.

In data centers, Microsoft hopes to succeed by taking a different tack from its archrival. Google maintains secrecy about its data center methods, working with only a handful of suppliers. It also does the majority of the engineering itself, possibly even creating its own servers. But 18 months ago, Microsoft decided to go in the opposite direction. It began sharing details about many of its innovations and plans. Says Forrest Norrod, general manager of Dell's (DELL) Data Center Solutions (DCS) Div., "Microsoft is…collaborating with the industry to drive innovation forward, to get great minds engaged."

Burrows is a senior writer for BusinessWeek, based in Silicon Valley .