We have been predicting for some time that while AWS is considered the market leader in cloud computing, Microsoft has a tremendous advantage with Azure and Office 365 among enterprise customers. On November 7, 2017, Forbes declared Microsoft to be number one, at least when measured by reported (or estimated) revenue.
This should come as no surprise, as Microsoft has so many factors working in their favor. The Forbes article cites Microsoft’s presence with IaaS, PaaS, and SaaS as key reasons for their success, and I’m not about to debate that. I will, however, submit that a primary reason for Microsoft’s success is a result of their previous relationships with businesses and organizations of all sizes. Organizations and individuals alike have embraced cloud technology with increasing willingness, but rarely do they immediately abandon their on-prem datacenters in favor of the cloud. Instead, they typically employ a hybrid environment as they test the cloud. This may leverage scalable growth or the cloud may be used for less mission critical IT demands while users learn to trust a third party with their IT needs. In most cases, unless a company has a disdain for Microsoft, Azure is the likely selection for cloud services. Virtually every organization has some sort of license with Microsoft, and since the software giant has invested heavily in developing robust cloud offerings, they become the logical choice.
While some may only think about Azure when considering Microsoft’s cloud presence, the company also benefits from Office 365, which is the cloud based offering of the world’s most popular business productivity suite. Microsoft reported that revenue from Office 365 in the commercial sector increased 42% during the first quarter of their fiscal year 2018, and that there are currently 28 million O365 users in the consumer space.
AWS may remain the dominant cloud service provider when measured by number of users, but even that may eventually be challenged if Microsoft continues at its current growth rate.