Houston Chronicle

It looks nice, but what’s in it for software titan?

- By Dwight Silverman

Friday’s announceme­nt that Microsoft would partner with the city of Houston on a wide-ranging technology agreement hit all the right checkboxes.

Digital literacy, check. STEM education, check. Helping Houston’s startup ecosystem, check. A smart city bristling with the “internet of things,” check and double-check.

Missing, though, was detail, which is where the devil lives, and a looming question: What’s in it for Microsoft?

Mayor Sylvester Turner and assorted Microsoft executives touted what the company was going to do for Houston, but nothing was said about how this benefits the software giant. In fact, there were none of the particular­s offered that typically accompany a partnershi­p announceme­nt of this scope. Turner and the Microsoft contingent never even talked about the cost of the initiative, implying that the city was going to receive the benefit of Microsoft’s expertise at little or no cost.

One clue came in Turner’s opening remarks.

“Now you know more about what I meant in my State of the

City speech this week when I said that we didn’t get Amazon, and so we will make our own,” Turner said.

In other words, if one enormous Seattle-area tech company won’t dance with Houston, we’ll waltz with this other one. Microsoft is more than happy to step in where Amazon failed to engage.

That’s because Microsoft is in the middle of a reinventio­n. Participat­ing in an ambitious project like this helps deliver the message that it can help drive a grand vision for an entire city’s digital future. For Microsoft, there are other checkboxes to consider.

Last month, Microsoft CEO Satya Nadella announced a reorganiza­tion that redefined Microsoft. The group that develops and markets the Windows operating system was moved inside the division overseeing cloud computing, and the man who had been heading up Windows said he was leaving.

It can be argued that Windows made Microsoft the tech powerhouse that it is, but it’s also true that an over-reliance on that product later threatened Microsoft’s relevance. When Nadella replaced Steve Ballmer as chief executive in 2014, one of his goals was to bring the company into the cloud-computing era, a mission as important as Microsoft’s embrace of the internet in the late 1990s.

And who is the biggest competitor in the cloud arena? It’s Amazon, with its Amazon Web Services platform. That’s the same tech Goliath that didn’t consider Houston’s bid for its second headquarte­rs to be worthy of finalist-city status. That snub launched Houston’s government and business leaders to bulk up its technology and startup portfolios.

In a February analysis of the cloud industry by Right Scale, a company that helps businesses manage their cloud efforts, Amazon was the top provider in terms of adoption, with Microsoft’s Azure platform in second place. But Right Scale noted that, while Amazon has the lead, Microsoft is growing faster.

By hooking up with the city of Houston, Microsoft can raise its profile in taking on big projects, as well as get in front of a lucrative customer base. Microsoft is positionin­g itself as a provider of “smart cities” services — helping municipali­ties gather data, make sense of it and then recycling that info into making things work better — in an initiative called CityNext.

On its website for CityNext, Microsoft touts using data to help Miami-Dade County, Fla., improve its handling of wastewater.

Houston is a much bigger project, with many more tentacles. Turner talked about Microsoft helping with the city’s post-Hurricane Harvey recovery, but he again didn’t offer specifics. Traffic, logistics and school security were also mentioned by Microsoft executives, but without key details.

Microsoft reps discussed the city’s attempts to turn Houston into a hotbed of startup efforts, which could be the most lucrative aspect of the deal for the company. By providing support to the fledgling businesses in incubators like The Cannon, TMCx, Station Houston and others, Microsoft can peddle its hardware, software and cloud platform without those pesky competitor­s.

The company is getting its foot in the door in a pivotal moment in the city’s history, and if Houston prospers as a result, then so will Microsoft.

Newspapers in English

Newspapers from United States