Microsoft’s strong cloud surge drives its Q2 growth

Azure is one of Microsoft’s largest and fastest growing businesses, and a significant focus for a company that describes its business strategy as “mobile first, cloud first.” It given Microsoft’s strength in industry and enterprise line-of-business, it’s easy to see that the Azure is well positioned for continued growth in one of the most significant areas in tech.

Billions of devices and sensors are sold and connected in a year and there is always need for the data to be store. Most of this data is stored in the cloud, because most of the system and services that can process and analyze that information run in the cloud.Big Data Clusters, advanced analytics and BI services, machine learning, and AI, all provided by platform like Azure are the engine of the Information age.


It’s obvious Azure is the product of Microsoft and , if we look down to the assumptions and real fact about Azure to predict future we need to focus on what their top administrator speaks, what does online surveys and resource material can be gather using search over internet

According to Corey Sanders Corporate Vice President, Azure

“We are committed to providing the right infrastructure for every workload. Across our 50 Azure regions, you can pick from a broad array of virtual machines with varying CPU, GPU, Memory and disk configurations for your application needs. For HPC workloads that need extremely fast interconnect, we have InfiniBand and for supercomputing workloads, we offer Cray hardware in Azure. For SAP HANA, we provide virtual machines up to 4 TB of RAM and provide purpose-built bare metal infrastructure up to 20 TB of RAM. Not only do we have some of the most high-powered infrastructure out there, but we also provide confidential computing capabilities for securing your data while in use. These latest computing capabilities even include quantum computing. Whether it’s Windows Server, Red Hat, Ubuntu, CoreOS, SQL, Postgres or Oracle, we support over 4,000 pre-built applications to run on this broad set of hardware. With the broad set of infrastructure we provide, enterprises such as Coats are moving their entire datacenter footprint to Azure.”

Azure is the 1 Choice for Corporates

A survey done by Cowen & Co. late last year revealed that cloud computing was the #1 IT spending priority for organizations. When asked which public/hybrid cloud provider they expected to use in the next 12-18 months, 71% of respondents picked Microsoft, with Amazon and Google getting the nod from just 24% and 17% of respondents, respectively. That’s a 3 percentage point improvement for Microsoft compared to a year earlier, when 68% approved the company. Interestingly, no other cloud provider was picked by more than 50% of respondents.

Biggest Customer of Microsoft Azure Platform ?
  • Apple iCloud
  • Pixar
  • Ebay
  • Travelocity
  • Boeing
  • EasyJet
  • Samsung
  • Xerox
  • 3M
  • NFL
  • Symantec
  • NetApp
  • Dell
  • Diebold
  • NBC
  • Mazda
  • GE Healthcare
  • General Dynamics
  • Fujitsu
  • EMC
  • Alaska Airlines
  • Aston Martin
  • BMW
  • LG
  • Trek bikes

Q2 Growth

Riding on a strong growth in its commercial cloud services, Microsoft logged a net income of $8.4 billion on revenues of $32.5 billion for the quarter ending on December 31.

Long known for its Windows software, Microsoft has shifted its focus to the fledgling cloud market where it is battling Amazon for dominance. The commercial cloud business registered $9 billion in sales for the quarter, for a $36 billion annual run rate.

Azure, Microsoft’s flagship cloud product, had revenue growth of 76% for the fiscal, down from a 98% surge a year earlier. Azure sales had increased 76% in the September quarter as well.

The company is rapidly picking up business from the retail industry in particular, which is aiming to keep pace with the e-commerce business of Amazon. This month alone, Microsoft announced deals with Walgreens Boots Alliance and Kroger, on top of a five-year agreement with Walmart it unveiled this summer.

“Our strong commercial Cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” said Microsoft CEO Satya Nadella “We are delivering differentiated value across the cloud and edge as we work to earn customer trust every day.”

But Wall Street has grown accustomed to blockbuster earnings beats as companies around the globe ditch their own data centers for the cloud.

“It wasn’t a blowout quarter,” said analyst Shannon Cross of Cross Research. “That’s probably playing a bit into” the stock decline.

The company also said a stronger U.S. dollar would hit growth of its intelligent cloud business segment, which includes Azure and other products, by 2 percentage points.

Microsoft has long courted customers outside the United States and has a 17 percent share of the global cloud market, research firm Canalys previously said. Amazon has 32 percent.

Microsoft is spending more on the latest cloud technologies to narrow the gap. Research and development expenses rose to $4.1 billion in the quarter from $3.5 billion a year earlier.

“Clearly the company is spending aggressively to double down on its cloud bet, a dynamic that is a smart move but caps margin upside in the quarter,” said Daniel Ives, an analyst at Wedbush Securities.

Microsoft’s total revenue climbed 12.3 percent to $32.47 billion. The revenue from Surface laptops increased 39%. The company had released Surface Pro 6 and Surface Laptop 2 during the quarter, along with Surface Studio 2 and Surface Headphones.

Revenue in personal computing grew by 7% to $13 billion and Surface is now almost a $2 billion business for Microsoft.

“Our solid execution delivered another strong quarter, with commercial cloud revenue growing 48% year-over-year to $9 billion,” said Amy Hood, Executive Vice President and Chief Financial Officer of Microsoft.

The revenue in productivity and business processes was $10.1 billion, registering a 13% growth, powered by double-digit revenue growth for LinkedIn and Office 365. LinkedIn revenue increased by 29% while Office Commercial products and cloud services revenue increased 11%, driven by 34% growth in Office 365 Commercial revenue. Office 365 consumer subscriber base has now hit 33.3 million.

Microsoft’s Dynamics products and Cloud services revenue also increased 17%, driven by 51% revenue growth in Dynamics 365.

Gaming revenue increased 8%, with Xbox software and services revenue growth of 31%.

***All the resources are collected online from various websites****

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