For Microsoft Corporation (MSFT), Cloud Proves More Lucrative Than Other Branches

Microsoft (MSFT)

At a time when most of the renowned names of the tech industry like IBM, SAP and Oracle are struggling to keep abreast of and embrace the latest developments, Microsoft Corporation (NASDAQ:MSFT) has not only leapt on to the new platform but has used it effectively to surge ahead of others too. This was proved by the quarterly revenue declared by the company, which turned out to be a figure higher than most forecasts thanks to products pertaining to cloud computing, tablets and phones.

Subsequent to the skepticism aired by established names like IBM and SAP about the amount of profits accruing from cloud computing, Microsoft Corporation (NASDAQ:MSFT) was under the scanner courtesy of its recent obsession with its unit dealing with the same technology. The gamble has indeed paid off well, as observed by analyst Daniel Ives, FBR Capital Markets, in the following comment –

“In light of recent negative earnings results from tech bellwethers Oracle, IBM, SAP, VMware, and EMC, Microsoft is bucking the trend and we would label these September results as a solid accomplishment.”

Microsoft (MSFT)

Data collected over the last four years has shown that gross profit margin of Microsoft Corporation (NASDAQ:MSFT) plummeted from above 80% to somewhere close to 65% when the company had switched its focus to manufacturing mobile devices like phones and tablets. Then it moved on to cloud computing, christening the program as Azure, and henceforth profits have been on the rise, increasing from 121% to 194% over a period of time.

Prediction by Rick Sherlund, an analyst with Nomura, states that if this trend continues, Microsoft would soon be accruing annual revenue which will be well above the $6-billion mark. Although this is representative of only 6% of the cloud computing industry, it would still establish Microsoft as the largest cloud vendor.

Microsoft Corporation (NASDAQ:MSFT) CEO Satya Nadella clearly expressed his company’s position when he said –

“We’re the only company with cloud revenue at our scale that is growing at triple digit rates. Our premium services on Azure create new monetization opportunities in media, data, machine learning, fast analytics, and enterprise mobility.”

Experts attribute Microsoft Corporation (NASDAQ:MSFT)’s resilience to the loyalty shown by its corporate customers as also its policies varying from those pursued by competitors namely Google and Amazon.

This article has been written by Vinita Basu.

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