Microsoft (News - Alert) earnings have exceeded expectations as Azure usage grows exponentially. Is it enough or does Microsoft need to do more to ensure future success?
The announcement late last month that Microsoft had earned net income exceeding $11 billion boosted company shares and made it abundantly clear to investors and competitors alike that Microsoft Azure, the company’s new cloud service, is a force to be reckoned with. Azure is tracking very nicely, as is evidenced by the fact that it grew a whopping 62% in the last year alone. However, experts have one big question on their minds: what’s next? Now that Microsoft has shown it can create a successful cloud service, what should the company do? Are there any risks in Microsoft relying on Azure to propel future growth and profits?
IT managed service providers work with business clients day in and day out. They know how prospective and current Microsoft users feel about the company's current and upcoming products and services. Ian Brady from Steadfast Solutions has a positive outlook on Microsoft's cloud service. He points out that bespoke development of applications and IT solutions that appeal to a particular target audience rather than the general public is now considered normal. It's not hard to understand why as a growing number of industries increase tech usage to market products, provide customer service, secure personal data, and proprietary business information, stay in step with industry regulations and more. Tech needs vary greatly depending on a company's size, location, industry, target audience, and other factors, so the creation of specialized software is likely to be a trend that will continue for some time. However, as Mr. Brady notes, Microsoft has one big barrier to overcome and that is user familiarity and reluctance to change. Many business owners aren't tech-savvy and so may hesitate to try out a new cloud service, application or platform when their current software programs are working well enough. This could make it difficult for Microsoft to convert uses from primary competitors such as Amazon and Google (News - Alert). The latter is still far behind Microsoft in terms of market share; however, like all big cloud platforms, it has seen market share grow exponentially in the last year.
On the other hand, Nick Allo from Semtech IT Solutions points out that Microsoft should focus on a device for mobile consumption now that it has shown it can successfully develop its own cloud infrastructure and services. The advice is certainly sound when one considers how many companies and employees rely on smartphones to do their jobs. Recent statistics show that 95% of Americans own a smartphone; what's more, some own more than one phone as they have a personal phone as well as a work phone. Over 70% of these individuals spend two hours a week accessing company information from their devices and almost the same percentage of individuals keep their phones within eye contact at work. Furthermore, more than one in five mobile phone owners make use of dedicated, department-specific business apps. Given these facts, it's clear that a Microsoft-made device for mobile consumption would propel the tech giant forward, increasing the use of its products and boosting its current and future revenue.
What's Next?
It's difficult to forecast what's next for Microsoft. The company is clearly doing well and will likely continue performing well in the future, but no-one knows for sure what direction it will take in the coming years. However, what can be said for certain is that Microsoft has certainly done well with its development of Azure as well as its other cloud-based services such as Microsoft 365. Cloud services, in general, are performing well as a growing number of companies migrate to the cloud to take advantage of lower costs, increased security and other benefits. It could very well be that Azure will be enough on its own to significantly boost Microsoft's profits.
At the same time, it's important to note that there are some obstacles in the path to total success. Microsoft not only has to deal with competitors but also business reluctance to switch platforms and services. Furthermore, without a device for mobile consumption, the company may be limited in reaching its target demographic. Microsoft would do well to not only appreciate its success but also look for various ways to boost its offerings instead of relying on a single successful new service.
