Amazon and Microsoft have helped make Seattle 'Cloud City'

SEATTLE – In a Seattle-area conference room earlier this year, Washington state's two largest employers started sketching out the future.

In a daylong series of meetings at Microsoft's campus, engineers from the software company knocked heads and keyboards with their counterparts at Boeing. The goal: tapping into Microsoft's Azure, the software maker's network of on-demand computing power, to build a new generation of software.

Boeing for years has made tools, from paper navigational aids to maintenance software, that help its aerospace customers fly and take care of their planes. Boeing is hoping to build web-based variants of its aviation analytics tools on Microsoft's Azure.

"If you're not building [tools] that are keeping up with your customers on a daily or weekly basis, you're falling behind," said Corey Sanders, a Microsoft manager who leads a cloud-computing team working with Boeing. "Because your competitors are."

Cloud computing, or ­tapping in to rented computer power and data storage over the internet, has existed for more than a decade. Most people know the cloud as the unseen servers that store the e-mails in their Gmail account or back up their iPhone photos.

But enabled by increasingly sophisticated technologies — and billions of dollars' worth of factory-sized server farms being built around the world — cloud computing is changing from a consumer phenomenon to one that's reshaping big business. Thanks to the growth of Amazon.com, Microsoft and a roster of ­Silicon Valley transplants, it's also reshaping Seattle.

Technologists compare the shift now underway to the advent of electrical utilities a century ago that sparked rapid advances in fields from agriculture to medicine and entertainment. Sales of internet-accessed software and technology services are expected to total about $118 billion this year, researcher Gartner Inc. estimates.

The technology industry is fiercely competing for that cash, a race pitting traditional business computing giants like IBM and Oracle against relative newcomers Salesforce.com and Dropbox, and hundreds of start-ups.

Seattle is at the forefront of this revolution, largely thanks to Amazon.

Google, Microsoft and Yahoo all built their own search engines, e-mail platforms and other global web services that relied on massive data centers, but it was Amazon that first started renting that kind of infrastructure to other businesses.

In 2006, the company launched Amazon Web Services, or AWS, which at first amounted to a big web-accessed hard drive where other businesses could store their data. A few months later, the company added a service where businesses could also rent the processing power available on Amazon-maintained servers.

At the time, office workers accessed the whole pile of technology from a personal computer.

That premise was a hit among technology start-ups, an alternative to shelling out tens of thousands of dollars for servers and software and spending days or weeks setting it up.

Much of the rest of the industry, living well off the high margins they were used to reaping from business software sales, was caught flat-footed.

A watershed moment arrived in 2013 when the Central Intelligence Agency awarded a large data-center contract to Amazon over IBM, a company with decades of experience providing technology services to giant customers.

When a big competitor did come calling, it was a familiar name.

After a decade of flubs in consumer technology, and a few false-starts in cloud computing, Microsoft has gone all-in on the cloud, investing billions of dollars in data centers from Australia to Germany and Quincy, Wash.

Scott Guthrie, the Microsoft executive vice president who oversees the company's Cloud and Enterprise unit, says the payoff has started to arrive in the past couple of years.

"There's almost no cloud [buying] conversation anywhere that we're not part of," he said in an interview.

This year, those conversations have made customers out of companies like BMW, General Electric and Boeing.