Tom Rizzo

It was the day after Microsoft snagged a cloud customer right out from under the nose of rival Google. That would be the city and county of San Francisco, which had considered Google and IBM but settled on Microsoft’s Exchange Online as home for 23,000 government employee email accounts. Meanwhile, Microsoft’s upcoming big cloud offering -- Office 365 -- is in beta and expected to roll out later this year.

So what better time to meet Tom Rizzo, senior director of Microsoft Online Services. I caught up with him Thursday afternoon over in Building 36 on the Microsoft campus. Here are some of the highlights:

On the landing San Francisco deal and beating out others in Silicon Valley: Rizzo said it was a nice “win” that validates Microsoft as a trusted service provider. “The location makes it even that much sweeter,” he said.

He touted Microsoft’s financially backed service level agreement as a reason why San Francisco went with Microsoft. “If our server goes down, we don’t meet SLA, we give you credit,” he said. “We put our money where our mouth is.”

It also helped that Microsoft had a software contract with San Francisco.

On the multi-day email outage of customers of Microsoft’s Business Productivity Online Services: Rizzo said Microsoft obviously takes outages seriously and learns from its mistakes. (Microsoft blamed the outage on “malformed email traffic on the service” and has promised a detailed post-mortem report.)

On Office 365: The new offering is in beta with 100,000 organizations and 2.5 million seats and is on track to be released later this year. “We are feeling quite good about competition in the cloud,” he said.

Rizzo said that there is a lot of interest in cloud services, and “we will see” if that turns into a log of business. He said he expects small and mid-size businesses to be the first to adopt because they have less to move to the cloud. What he called the “pro-sumer,” an interior designer or other one-person operation will be quick to move over, said Rizzo, who said about 70 percent of those who signed up for the Beta were small businesses.

At the same time, he said large enterprises will probably move to the cloud more cautiously and maybe incrementally. Maybe moving mobile workers to the cloud first, for example. He said he expects many larger businesses to be hybrids, wanting a mix of cloud storage options to go along with keeping some storage inhouse.

Rizzo said Microsoft has the edge over Google, because Microsoft gets the bulk of its revenue from selling products and services, while Google gets the majority of its revenue from advertising.

He said privacy is a big issue with the cloud, as he took another swipe at Google. He said that Microsoft doesn’t scan cloud clients’ emails, except for viruses or spam. “We are not going to scan email like Google does and sell you an ad on the right side,” Rizzo said. “At the end of the day, the customer is the customer for us. At Google, the customer is the product.”

His last zinger: “Google likes to bark a lot,” Rizzo said. “We are poised to answer their bark, and we have a lot more bite.”