Microsoft Closes Gap With Amazon In Cloud Business, Its Division Continues To Grow

Cloud computing is turning out to be the most important business for Microsoft as the company reported encouraging growth in this segment last week.

Microsoft has altered its focus to cloud computing as it transits into the post-PC era and certainly has reasons to celebrate as it slowly but surely is catching up with its biggest rival in the segment – Amazon.com. Microsoft was able to cement its place as the second-place position in the cloud computing market as this segment provided most of the success for the company in the latest quarter.

In the latest quarter, $7.8 billion was generated by the Azure cloud computing division of Microsoft. The company said that there was an increase of 98 percent in the revenues from Azure even while the company does not disclose dollar figures for each product. there was a 41 per cent rise in the revenue of the company’s Office 365 product which allows the Office software to be taken o the cloud.

The Xbox One X game console of Microsoft, launched in November 2017, also drove the strong growth in the hardware segment of the company.

Issues of consumer trust being faced by the IT industry at large were touched upon by Microsoft chief executive Satya Nadella in addition to the financial info. While not naming any specific rivals, he said: “Microsoft runs on trust” and views that as a key differentiator. “In an era where there is rapid transformation driven by digital technology, customers are looking for a trusted partner,” Nadella said, “someone with a business model that is aligned with their long-term interests, deep technical innovation and an understanding of the responsibility that goes along with this innovation.”

With a revenue report of $28.9 billion, revenues of Microsoft lightly beat the market expectations. But the company recorded a loss due to a one-time $13.8 billion tax charge because of the changes in the U.S. tax laws. A loss of $6.3 billion was reported by the company. Calculations of additional tax impacts due to the new law had not been completed by the company, Microsoft said.

There was a rise of 8 per cent in revenues for its gaming segment during the holiday quarter, Microsoft said.

However, this did not compare with the revenues generated by rival Nintendo which recorded banner earnings and the sales of the Nintendo Switch console reported a growth of 261 per cent. According to a report last week from the market research firm NPD Group, Microsoft’s and Sony’s console sales were dwarfed by the Nintendo console in December. The Nintendo console allows usage on the go or in the living room.

Microsoft is focused on the gaming cloud and entertainment services on the PC and sees the gaming business to be an opportunity apart from the console business, said Nadella when asked whether the company was lagging behind in gaming.

(Adapted from WashingtonPost.com)

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Categories: Economy & Finance, Strategy, Sustainability, Uncategorized

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