While Amazon courts enterprises, Microsoft eyes startups

Microsoft announced a partnership with TechStars today that will allow it access to more than 400 startups around the world so it can sell its Azure cloud platform. The deal will provide a year of hosting on Microsoft’s (s msft) Azure platform as a service for existing and former TechStars participants, and the second year at half off, for up to $60,000. It also extends to the more than 300 startups that are part of TechStar’s Global Accelerator program that connects 40 incubators worldwide.
But as Microsoft tries to sell startups on its services, is this deal enough to turn the tide of startups away from Amazon (s amzn) and Rackspace? Azure has been live since Feb 2010, and despite some big customers touted by Redmond, in general Azure isn’t a name I hear often from startups. Patrick Riley, director of business development at TechStars, notes that as of 2010 (about 18 months ago) 35 percent of the incubator’s startups used Amazon’s services, 30 percent used Rackspace (s RAX), 20 percent used Media Temple and 5 percent used SoftLayer. The rest fell under the “other category, which may or may not include Azure, which had launched earlier that year.
Getting startups on board is important for the future of a cloud business. While enterprise may be where the big bucks are, enterprise cloud deployments tend to be a small chunk of their IT operations and they may never commit fully to the cloud. Meanwhile, startups are risky, but where the growth is. In many cases, a startup using an outside infrastructure or platform as a service still has to design its architecture for that service, so convincing a startup to launch on your platform is a step toward gaining a customer for the life of that application (some will last longer than others). Additionally, because people tend to favor “the devil they know over the devil they don’t,” once an engineer is hooked on AWS for example, it may be much harder to get him to use Rackspace or Azure at his or her next job.
Azure has tried to broaden its base in recent months by adding new support for languages, such as Node.js, which has become a hot one for web developers, while rivals in both the infrastructure and platforms as a service space are racing to add features that will appeal to the enterprise. When asked how many startups are on Azure, Doug Free, a Microsoft spokesman, said that there are “thousands using it,” but he couldn’t give me a percentage. Microsoft added discounts to Azure as part of BizSpark program for startups when Azure launched, but this offer with TechStars is far broader and more significant in terms of how much it provides for startups.
Azure is said to be a quality platform, so perhaps all it will take for startups to hop on Microsoft’s cloud is an introduction during their formative weeks. If so, then this deal could help Microsoft make strides with tomorrow’s big cloud customers.