Microsoft, Prioritizing Cloud Computing, Reshuffles Units

SAN FRANCISCO (Dow Jones)–Microsoft Corp. (MSFT), in a move underscoring the growing importance to its future revenue profile of cloud computing, said it was creating a new business unit to focus on the fast-growing new technology trend.

Cloud computing is a broad term for a range of technologies which enables organizations to have their computing operations stored off the premises, accessed through the Internet on a metered basis.

Microsoft, based in Redmond, Wash., is merging two existing sub-units within its broader server and tools business: the Windows Azure group, which has driven the launch of its cloud-computing program, and the Windows Server and Solutions Group, the company said in an internal blog posting.

The new division will be called the Server and Cloud division, and will be headed by Amitabh Srivastava, who reports to ultimate server and tools unit head, Bob Muglia.

A number of companies, ranging from Internet giant Google Inc. (GOOG) to online business software provider Salesforce.com Inc. (CRM) are clamoring to offer companies tools to allow them to take advantage of cloud computing, which among other things allows customers to slash IT labor costs.

Microsoft’s challenge is to grab a greater slice of the nascent market without damaging the profitability of its products, the vast majority of which are still hosted and used on PCs or corporate servers.

Windows Azure, which Microsoft launched this fall, is the central plank of its cloud-computing strategy. Microsoft didn’t comment beyond the internal statement.

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