Customers today expect modern solutions that save money, increase security, and give employees the flexibility to work anywhere, any time, on any device. At the same time, potential of Cloud continues to grow in the country. According to IDC research, Cloud spending is expected to exceed $500B by 2020. Growth in revenue of commercial cloud computing business has helped push Microsoft’s quarterly revenue above Wall Street’s expectations, sending the technology company’s shares up more than 4 per cent in after-hours trading, as reported by Channel News Asia.
The cloud business – essentially selling computing services and storage in its data centers to corporate customers – is one of the priorities for Chief Executive Satya Nadella, who took the helm of the world’s largest software company in early 2014. Nadella has refocused the company on cloud and mobile in the face of stagnation in its traditional PC-based Windows business.
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“Only two companies are setting the tone of enterprise computing, Microsoft Azure and Amazon AWS,” said Trip Chowdhry, Managing Director of Global Equities Research, referring to Amazon.com Inc’s web services unit. “These are the only two initiators in the whole enterprise space that are going to see growth in excess of 80 per cent year-over-year for at least two or three years.”
Microsoft’s Growth Statistics
Despite Microsoft Windows smartphone less popularity and sales drop tension, the place where Microsoft played its strategy game to raise the revenue is through “intelligent cloud” businesses, which includes the Azure cloud platform and server software, rose 7 per cent to $6.7 billion.
Microsoft has promoted their Azure by stating, “When it comes to the cloud, trust and security are paramount.” That is where the revenue for Azure – which customers can use to host their website, apps or data – grew 102 per cent, but Microsoft did not say what the actual revenue figure was.
An annual “run rate” of $12.1 billion for cloud-related revenue, up sharply from over $8 billion a year ago. Microsoft calculates run rate by multiplying revenue in the final month of the quarter for its cloud businesses by 12.
Despite revenue flow, Microsoft is still struggling to increase profit in the capital-intensive cloud business. It said operating profit in its intelligent cloud businesses fell 17 per cent to $2.19 billion in the quarter.
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Microsoft said the drop was mainly due to higher research, development, sales and marketing costs, as it makes investments and acquisitions to “drive cloud sales capacity and innovation.”
Overall, Microsoft posted revenue for its fiscal fourth quarter ended June 30, adjusted for some one-time items, of $22.6 billion, up 2 per cent from a year ago. That beat Wall Street’s average forecast of $22.1 billion.
It reported net income of $3.1 billion, or 39 cents per share, compared with a loss of $3.2 billion, or 40 cents per share, a year earlier. In the year-ago quarter it took a $7.5 billion charge to write down the value of its purchase of Nokia’s handset business. Microsoft reported earnings of 69 cents per share whereas average forecast of 58 cents.