The computing landscape has changed dramatically as businesses and consumers alike increase their dependency upon cloud computing. There are still some who are reluctant to trust another party with their data, but the economies of cloud computing cannot be denied. The efficiency and potential cost savings for customers, whether monetarily or the result of other factors, has created a hosting opportunity large enough to support industry giants Google™, Amazon™, and Microsoft®. Microsoft is late to the party, but that doesn’t mean they aren’t a viable competitor, as evidenced by the recent earnings report. Microsoft has a competitive advantage the others lack in that they have existing relationships with customers of their commercial software. Microsoft can present a strong case that Azure™ works particularly well with Windows Server™, SQL Server™, and Active Directory®. They are also attempting to address the needs of private cloud customers wishing to host within their own datacenter with the recently announced “Cloud Platform System”. The Cloud Platform System is a Dell® server capable of running the same Azure™ APIs, services, hypervisor, and everything else which is available in the Azure™ public cloud.
Microsoft had another record first quarter and exceeded Wall Street’s expectations. The software giant reported revenue of $23.20 billion, compared with $18.53 billion from the same quarter a year ago. Diluted Earnings-Per-Share were 54 cents, compared to 62 cents a year ago. Analysts were expecting EPS of 49 to 50 cents and revenue of $22.02 billion.
Commercial Licensing revenue increased 3% or $262 million. This was primarily the result of increased revenue from Windows® Commercial and server products, but offset by a decline in Office Commercial revenue. Server products (primarily SQL®) grew by $406 million or 11%. Somewhat surprisingly, Windows Commercial revenue grew $80 million (10%) thanks to increased renewals and new customers. Office Commercial revenue declined $322 million (7%) as many VL customers transition to Office 365™.
Commercial Other revenue increased $805 million, or an impressive 50%, thanks to a $662 increase (128%) from Commercial Cloud revenue. Azure™ revenue was also up by 121%. Enterprise Services increased $142 million or 13%, which was primarily due to Premier Support Services.