Satya Nadella, CEO of Microsoft Corp., will speak at the WSJDLive Global Technology Conference in Laguna Beach, California, USA, on Monday, October 24, 2016. The conference brings together a group unparalleled of top CEOs, founders, pioneers, investors and lighting to explore emerging technical opportunities around the world.
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Microsoft’s Azure cloud for hosting websites and applications will replace Office productivity software as the company’s largest source of revenue sometime in 2022, Piper Sandler analyst Brent Bracelin predicts.
It would be a remarkable milestone, noting Microsoft ‘s successful move from real estate software to cloud – based services since Satya Nadella took over from Steve Ballmer in 2014.
Piper Sandler, which has the equivalent purchase value of Microsoft stock, said Azure revenue in the quarter rose to $ 7.20 billion in the quarter ended December 2020, which would mean that it accounted for 17% of Microsoft’s total revenue, compared to 4% three years ago. Microsoft will not reveal Azure revenue in dollars, but Piper Sandler ‘s estimate is in line with broader sentiment. Analysts at William Blair, which also has a buy rate for Microsoft, estimated Azure’s revenue was $ 7.40 billion.
That means Azure is already much bigger than the Windows franchise, which dates back to 1985 and helped make Microsoft the most valuable and powerful tech company in the world. the world in the 1990s. Windows generated $ 5.72 billion in revenue in the quarter, according to a Microsoft earnings statement.
Azure has also surpassed Office 365 revenue from commercial customers in its second fiscal quarter, according to Piper Sandler.
Now it’s a matter of determining when Azure could deploy all offices, including user membership to Office 365 and traditional office licenses. Piper Sandler says that is likely to happen next year.
“We have Azure quarterly revenue of $ 11.8B by June 2022 (including Office total revenue of $ 10.9B for the first time),” Bracelin told CNBC in a post -d Wednesday.
Microsoft’s office license has been around since 1989, and its oldest component, the Word processing software, has been around since 1983. It has a market control division, and under Nadella Microsoft has a lot of -move purchases from purchasing Office software licenses to paying regularly for Office 365 subscriptions.
Azure, by contrast, has only been available since 2010 – originally called “Windows Azure” – and technology industry research firm Gartner thought that in 2019 it was around 40 % size of Amazon Web Services market leader, introduced by Amazon in 2006.
Both Microsoft Office and Azure started at Microsoft while Ballmer was CEO, but Nadella has made Azure a bigger area of focus, creating cloud partnerships with companies that have historically been competitors, including Salesforce and Sony. Nadella also directed Azure before accepting the title of CEO.
“He was in charge of key technical strategies and trends across the company’s products and services, in particular our move to the cloud and the development of one of the world’s largest cloud infrastructures supporting Bing, Xbox , Office 365 and other services, “Microsoft said of Nadella in his 2014 replacement statement after he became CEO. “This experience is fundamental to the company’s current strategic direction. “
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COMMENT: Azure is a key driver for Microsoft’s growth: Bernstein’s Mark Moerdler