Microsoft’s recent quarterly profit and revenue announcement was met with increased support for its improved performance since current CEO Satya Nadella took over in 2014.
Many of the profit gains have flowed from Nadella’s pivot from individually licensed PC software to business products and services such as Azure cloud computing and the flagship Office 365 productivity suite.
As businesses rush in to working via the cloud, the Azure service has grown to serve 16% of the global cloud infrastructure market, managing 89% revenue growth in the quarter ending June 30. While 16% is a small slice of the sector overall, this percentage is still enough to make it second only to Amazon’s pervasive Web Services platform.
InvestorPlace.com analyst Tom Taulli said:
“[It’s] the combination of the cloud, which is a megatrend that's going to last for years to come, and the execution. This is a company that knows how to sell and be innovative.”
The company’s productivity and business processes team recorded a revenue increase of 13.1% to £7.35bn. The unit, which develops and supports Office 365, slightly exceeded analysts’ expectations of £7.34bn.
Also of note was the 37% year-on-year revenue increase recorded by LinkedIn, which Microsoft purchased for £19.9bn in 2016. Shares in the company rose following the report, and have risen 180% under Nadella’s stewardship.
Though Microsoft’s competitive strength in the business market looks to be sound, it is apparent it still hopes to regain its foothold in personal computing and devices where it has had a raft of misfires over the past decade or so. Groove Music, the Microsoft Band fitness tracker and Windows Phone have all come and gone without much impact.
During the earnings call, Nadella pointed to increasing usage of Office 365 by individual consumers, noting revenue in the personal space increased 8% with the home subscriber base now at £31.4m.
Recently the company appointed Yusuf Mehdi as Corporate VP of Modern Life and Devices, who gave a presentation on the Microsoft’s vision for Modern Life Services. He indicated plans are in the works to blend cloud computing – what Microsoft calls the ‘Intelligent Cloud’ – with the ‘Intelligent Edge’, which are devices for personal use including Surface tablets, Xbox consoles and Windows PCS.
Despite the entertainment focus of products like Xbox One, Microsoft still plans to focus on ‘professional consumers’. Mehdi believes there is a market opportunity in targeting people who understand technology but could better use it to make themselves more productive.
The humble calendar application, Microsoft Outlook, is seen as being ‘in’ with professional consumers. As it is already in widespread use for commercial activities, Mehdi says it can be leveraged to blur the line into the personal space. Cheaper devices such as the soon-to-be-released Surface Go tablet will also add to the company having a constant presence in people’s lives.
For more information about how Microsoft’s collaborative products, including Teams and Office 365, can help your business, get in touch with us at WM Reply .