There was a Windows Azure outage on Feb 29, which resulted in the management service being down for about 8 hours. The actual virtual machines that most customers had were unaffected, but the ability to perform management functions was down for a number of customers.
That's distressing for customers, and embarrassing for Microsoft, who is spending a lot of resources to promote cloud computing and their Azure services. It lends credence to the fears and concerns of many technology professionals that outsourcing parts of their infrastructure to a cloud provider is a problem.
However is it a big problem? I've had outages in nearly every company I've worked, often because of problems in the architectures that are built by those same IT people that disparage the cloud. I've found that a few outages were from vendor patches, a few from failures, and a good portion were stupid mistakes, often from a lack of testing. We worked hard to fix things, but we often weren't able to give management much more of an idea when things would be working than a good status page for Azure would provide.
It's easy to disparage outsourced services as less reliable than in-house services, but I'm not sure that's true. There is definitely a loss of control, but that comes at a cost savings, and the balance between them is something that each company needs to decide. However I think lots of management might prefer in-house infrastructure for a simple reason: it gives them a specific neck to choke, and possibly replace, when things go wrong.
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