How Microsoft has benefited from transition to cloud
Key takeaways for investors from Microsoft’s 1Q15 earnings review (Part 6 of 14)
Microsoft segment benefited from transitioning IT infrastructure to cloud
In the current times of shrinking IT expenditures, corporations and organizations are increasingly embracing the cloud architecture. The Microsoft (MSFT) cloud segment has benefited greatly from the transition. Microsoft’s strategy of combining the Azure cloud platform and Office 365 is expected to find many takers, especially small- and medium-sized businesses (or SMBs). Also, Microsoft’s cloud technology is compatible with its new range of servers, giving the company an edge over its peers by facilitating the ease of transitioning to cloud computing.
Products gaining adoption and acceptance
Microsoft didn’t disclose figures about commercial cloud revenues. However, it did disclose that commercial cloud sales and sales of services based on its Azure cloud platform grew by 128% and 121%, respectively. Azure cloud platform has contributed significantly to keeping the margins intact in the cloud segment. As the above chart shows, Microsoft, along with Amazon (AMZN), made it to the leaders’ category. IBM (IBM) and VMware (VMW) are other players in cloud space.
Microsoft aims to offer higher margin offerings through cloud
According to Microsoft CEO Satya Nadella, ““Our premium services on Azure create new monetization opportunities in media, data, machine learning, fast analytics, and enterprise mobility.” Thus, through the Azure cloud platform, Microsoft’s focus and aims lie in selling higher-margin services to its corporate clientele rather than merely functioning as a storage house and computing power service provider.
Deals to enhance Azure adoption
Recently, Microsoft announced that in order to improve the scalability, adoption, and installation of Azure, it has joined hands with Dell to deliver the Microsoft Cloud platform system. The system bundles Azure, Windows server, and system server on Dell servers. Microsoft has increased the total number of Azure regions to 19, Australia being the most recent one. The company claimed its regions are two times more than Amazon’s web services and five times more than Google’s (GOOGL).
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