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Editor’s note: The Marks Group PC is a Microsoft Partner.
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You know how Henry Ford was famous for saying, "You can have any color car you want, as long as it's black"? When I started my technology firm back in 1994 it was the same for technology.
Back then and for the next decade or so, we would tell our clients that they could buy any computer or server they wished, just so long as it ran Microsoft Windows. It was an obvious recommendation to make. For decades, Windows dominated the operating system market and Microsoft's monopoly meant that most applications — particularly the business applications we sold — were written to only work on computers running Microsoft's software.
Of course that's now changed. PC sales have slumped and Microsoft’s share of the operating system market has precipitously declined. Competing systems made by Google and Apple are running on billions of devices. Customers and long-time partners like my firm worried that Microsoft had lost its mojo.
But our worries have vanished. Microsoft has pivoted, and this week, as it prepares to release its fourth-quarter earnings this week, let's be clear: Microsoft has not only become a cloud-based software provider, but is very quickly catching up to the leaders in the space. Sure, there are millions of PCs and other devices running Windows 10 and prior versions. But the company’s future now lies in a different operating system: Azure.
"Azure has replaced Windows as the platform underpinning Microsoft's enterprise offering, and we forecast it exceeding $100 billion revenue over the next decade," analyst James Cordwell was quoted in this CNBC report. "With Office 365, Microsoft has already established a strong position in the software as a service market and there remains robust growth potential as the greater accessibility of the cloud delivery model continues to drive expansion in the user base and customers steadily upgrade from basic packages."
Azure goes well beyond just running servers in Microsoft's data centers. Azure developers are given tools and services to create websites, mobile applications, messaging, storage, search and database driven solutions that are being used today to drive artificial intelligence, machine learning, gaming, blockchain and Internet of Things applications for millions of users and thousands of companies.
And it's being adopted…fast. According to Microsoft approximately 90 percent of the Fortune 500 use Azure-driven applications and the company is signing up 120,000 new subscriptions every month. Boeing, Samsung, Xerox, 3M and Apple are running their applications on the Azure cloud. Microsoft's biggest win so far this past year has been software giant SAP's embracing of its cloud platform, moving its mission-critical client driven applications and data for some of the largest companies in the world to servers running Azure.
It was only a few years ago that the company lagged far behind the world's biggest cloud players, Amazon Web Services (AWS) and Google. But no longer. While AWS still maintains its position as the No. 1 cloud service provider, Microsoft is quickly catching up, and followers of the company are feeling bullish.
"Microsoft has a good chance of becoming the first tech vendor to reach $7 billion in quarterly commercial-cloud revenue when it releases earnings on July 19 while Amazon could very well hit $6 billion in AWS revenue when its numbers come out later in the month," Bob Evans, a former communications strategist at both SAP and Oracle recently wrote in Forbes. Although Amazon's numbers have been "gravity-defying" of late, Evans says that Microsoft’s cloud business is growing even faster, generating almost $6 billion in revenue this last quarter compared to $3.8 billion a year ago. Its growth has also bolstered revenue gains for both its Office 365 and Dynamics product lines as well.
All of this is good news for Microsoft investors and partners like my company. Microsoft’s stock has soared more than 44 percent over the past 12 months and both its earnings per share and revenue significantly jumped last quarter. Many are expecting to see revenues up almost 20 percent when the company announces its earnings on July 19th.
The message for Microsoft’s investors, customers and partners like my firm is clear and the numbers prove it. Microsoft has successfully pivoted to the cloud. Windows is the past. Azure is here to stay. Accept that fact and build your technology strategy around it.
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