Microsoft Wins Big with Windows Azure Internet TV Deal in China

Microsoft’s Azure cloud computing platform won a strong endorsement Monday when PPTV, which claims to be China’s leading Internet TV service provider, signed on to launch its platform on top of Windows Azure’s new Media Services offering.

Specifically, PPTV will launch its PPTV Asia TV Networks (ATN) platform on Windows Azure, marking both an important design win for Microsoft as well as its first cloud-based collaboration with a local Chinese new media company.

PPTV will adopt Windows Azure as the core infrastructure platform for PPTV ATN. The service will provide a cloud-based Internet TV solution, while exploring the collaboration opportunities with Microsoft on online TV, media service platform and Content Delivery Network (CDN) for its next generation domestic market needs, the company said.

That’s important.

While Microsoft has marketed Azure as its public cloud technology, capable of deploying both Windows Server and Linux virtual machines, the company has also positioned it as a challenge to existing content-delivery networks. In April, for example, at the National Association of Broadcasters (NAB) show, Microsoft announced Windows Azure Media Services, most likely the next step beyond the partnership Microsoft struck with PPTV. And video service providers like Netflix and Google’s YouTube are also establishing (or have established) their own content-delivery networks.

Microsoft Plays the China Card

Building ties in China is also key, both for economic and legal reasons - the Chinese government encourages joint ventures with Chinese partners, although the requirements to do so have loosened. The economies of the so-called BRIC regions (Brazil, Russia, India and China) are growing strongly, fueled by their need to catch up to the rest of the world’s infrastructure. Microsoft chief financial officer Peter Klein told analysts in January that Microsoft sees a “particular strength” in the BRIC markets, one that could be a “driver of growth” for the company.

Chuck Tao, the chief executive of PPTV, said that the costs to roll out a dedicated video infrastructure were prohibitive, and that it had turned to Microsoft to fill the gap. From a content perspective, Tao said, the Azure platform lets global content providers upload content to the library, and to license it to service providers through revenue sharing.

“PPTV chose Windows Azure platform because of its reliability, scalability, and global availability, which can accelerate PPTV’s international expansion. PPTV ATN creates an innovative user experience, to deliver to global audience with global contents, live and VoD, across screens,” said Tao in a statement. “PPTV ATN is also the first to deliver complete video cloud service on Azure. With Windows Azure, we can offer scale and flexibility not found anywhere else. We can also avoid unpredictable resource and demand fluctuations globally. PPTV ATN can thus pass on these benefits to our partners, and in the end to our global customers. This is a new competitive edge for our business.”

Tao’s reference to multiple screens is probably further evidence that the company could shift to Windows Azure Media Services (WAMS)in the future. With WAMS, content can be delivered to virtually all clients, including HTML5, Silverlight, Flash, Windows 8, iPads, iPhones, Android, Xbox and Windows Phone devices, developer Scott Guthrie noted at the time of the offering’s launch.

“Cloud computing is widely recognized as the nerve center of the next generation of information technology. And cloud-based services for most of the cases are well-connected to local markets,” said Ya-Qin Zhang, Microsoft’s corporate vice president and the chairman of Microsoft’s Asia-Pacific R&D group, in a statement.

Content Delivery Networks Go Global

In 2011, Microsoft disclosed that it had placed six content delivery network nodes in the Asia-Pacific region. None are located in China, however; according to Microsoft, nodes are available in Hong Kong and Singapore, but not within the Chinese mainland.

Meanwhile, rival Netflix said in June that it had begun establishing its own content delivery network, which it dubs Open Connect. The company also uses third-party CDNs to stream video, with partners believed to include Level3, Akamai and Limelight. Netflix also uses Amazon Web Services.

“Given our size and growth, it now makes economic sense for Netflix to have [its own CDN] as well,” Ken Florance, vice president of content delivery for Netflix, wrote in a June blog post. “We’ll continue to work with our commercial CDN partners for the next few years, but eventually most of our data will be served by Open Connect.”

Big Deal For Microsoft?

What does the PPTV deal mean for Microsoft’s future success in content deliver networks? According to Diya Soubra, the managing partner for SCH Consulting in France, Microsoft has already demonstrated the capability of offering multiple languages and subtitles for the same movie, a key requirement for a CDN offering with global aspirations. That technology was sucessfully used by the Vatican to translate its weekly radio address into multiple languages. The Azure platform also now allows users to “bookmark” their progress when watching movies, allowing them to pick up where they left off, even if they continue watching on another screen.

“If this ecosystem really does deliver all these elements it promises, IPTV infrastructure providers should pay very close attention, as Microsoft, with their immense buying power, may yet have the potential to displace some of the biggest names in the industry and become a CDN frontrunner in their own right,” Soubra wrote.

 

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