Microsofts Bet On The Cloud Is Paying Off


Pavithra Mohan

February 1, 2016

Barely two years into Satya Nadella’s tenure as Microsoft CEO, the once-passé tech giant continues to gain ground, as evidenced by Thursday’s quarterly earnings report. Nadella has shifted much of Microsoft’s focus to its cloud business, a decision that appears to be propelling the company forward in spite of declining revenue this past quarter.

Microsoft’s overall revenue fell to $25.7 billion, partly due to the company dialing back its failed smartphone business last summer. But during the earnings call, Nadella and other Microsoft execs stressed the success of the company’s cloud computing platform, Azure, and productivity software, Office 365—both of which showed significant growth. Azure’s revenue jumped 140%, while Office 365 expanded by 70% and now boasts 20.6 million consumer subscribers.

Since Microsoft reports its Azure revenue within what it calls the Intelligent Cloud division, it’s unclear how much Azure, in particular, raked in; the cloud unit as a whole, however, brought in $6.3 billion, a 5% increase from last year. Same goes for Office 365, which falls under the umbrella productivity category that drew $6.7 billion in revenue (a 2% decrease).

Amazon—which also presented its earnings this afternoon—revealed today that its competing cloud computing product, Amazon Web Services, is seemingly growing at a slower rate than Microsoft’s product, despite being the industry leader. The service brought in $2.4 billion in revenue, up 69% from last year.

Nadella also shared that Windows 10 was now powering more than 200 million devices, a number that Microsoft hopes will hit $1 billion in the next few years.

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This article was written by Pavithra Mohan from Fast Company and was legally licensed through the NewsCred publisher network.

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