It isn’t the first time Microsoft® (or countless other companies) has been accused of manipulating numbers to make something appear better than it really is, but allegations have surfaced which suggest that Azure may not be quite as successful as Microsoft would like us to believe.
No one seems to dispute that Amazon Web Services™ (AWS) is the market leader, and Microsoft Azure continues to report very impressive growth. By most accounts Microsoft appears to be the second largest, narrowly leading IBM®, but how many Microsoft customers are actually using it?
Virtually all large companies have some form of relationship with Microsoft or their resellers, which typically includes at least one Enterprise Agreement (EA). Microsoft is wisely leveraging these agreements to promote Azure and their cloud services, often including them in license renewals at little or no cost (for now, anyway). Since the products are included as part of the EA, a portion of the total EA revenue may be applied to the cloud, even though the customer may never deploy anything.
Reports are mixed about how often this may occur, and it’s unlikely anyone within Microsoft will publicly acknowledge the practice, but when we consider the revenue generated by Enterprise Agreements, even a small percentage allocated to Azure could create potentially misleading data.
Perhaps it’s in response to the recent allegations or maybe it’s because Amazon recently disclosed their AWS revenue ($1.57 billion in Q1 and $6.26 billion annualized), but for whatever reason, Microsoft seems to be feeling the pressure. During their FY Q3 earnings report they stated (slide 15) that “Customer usage of Azure compute more than doubled”, but they failed to disclose any numerical data specific to Azure.
Microsoft did say that they are on “an annualized revenue run rate of $6.3 billion”, but that would include Office 365™ and CRM Online as well as Azure.