“In a suburb outside Chicago, Microsoft has been showing off its latest data center. The 707,000-square-foot building will hold, at top strength, 162 sealed cargo containers of up to 2,500 computer servers each, plus thousands more servers in conventional racks. The cost: $500 million. But though Microsoft’s Windows 7 operating system is capturing all the attention these days, this bland building might be a place to see the company’s future.”

“All the computers will run on a single operating system called Azure that, eventually, will let big companies run applications like e-mail and house data at this and other Microsoft ( MSFT – news - people ) centers. Azure is the company’s main play in the biggest contest in technology, called cloud computing, wherein data storage and computation take place many miles from customers’ desks. The idea is to cut the cost of the labor, the hardware and the energy that go into data processing, and to make files accessible to workers who move around a lot. Proponents promise cost reductions between 30% to 90%. At the Chicago center only three Microsoft employees and a few contractors can run over 400,000 servers catering to more than 670 million e-mail and instant messaging accounts and drawing 60 megawatts of electricity.”

“Microsoft will initially use this center to run 250 of its businesses, including the Bing search service and the Xbox Live gaming platform. Those now run on servers all over the world. But the real goal is to persuade big companies like Coca-Cola Enterprises ( CCE – news - people ), Fujitsu and Pitney Bowes ( PBI – news - people ) (which have taken a peek) to trust their data to the megacomputers and then trust Azure to manage it.”

If we’ve seen anything this week — enter Los Angeles -  it’s that the battle over the cloud is going to be a long, hard-fought one.

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