Why Microsoft has been strong since Satya Nadella became CEO

Part 2
Why Microsoft has been strong since Satya Nadella became CEO (Part 2 of 5)

Why Office 365 and Azure lead cloud services growth at Microsoft

Office on the iPad is a huge success

A few months ago, Microsoft (MSFT) launched its Office app for Apple’s (AAPL) iPad. This was a good move for Microsoft, which is trying to increase its cloud offerings and at the same time get away from the exclusive software offering for its Windows operating system. The company had been reluctant to do this in the past, when Windows was the dominant operating system on PCs, but in the modern era of smartphones and tablets, this policy doesn’t hold any merit.

During the Cowen & Company Technology, Media & Telecommunications Conference on May 28, Microsoft’s management commented, “Since launch just in the first week it had more than 12 million downloads and now we have over 27 million downloads. It has received really very favorable reviews and even on the App Store for iOS which is one if the top downloaded list.” Management also stated that Office 365, which is the cloud version of Microsoft Office, had 1 million subscribers in the first 100 days of its launch and 4.4 million subscribers after a year in service.

Cloud Services SpendingEnlarge Graph

Microsoft is focusing on cloud products to leverage the fast-growing cloud services market

As the chart above shows, and according to IDC, the cloud services market is expected to grow from $47.4 billion in 2013 to $107.2 billion in 2017 at a CAGR (compound annual growth rate) of 23.5%. No wonder Google (GOOG), and Amazon (AMZN) have also taken an aggressive route to tap the growing cloud services market. While Office on the iPad will help Microsoft increase its subscription revenues, Google recently announced drastic price cuts for its own cloud service. Recently, Cisco (CSCO) announced that it will make a $1 billion investment to build its expanded cloud business. Another big player, Intel (INTC), also announced a significant investment of money and technology in Cloudera, a company that provides Hadoop-based software.

Microsoft Azure is also growing rapidly

Microsoft Azure is a cloud computing platform used to manage applications through its own data centers. During the Cowen & Company event, Microsoft management commented, “Azure is growing at a very fast pace. Just the last quarter, as Azure revenues grew over 150%. This growth is driven by both new customer adoption, as well as increasing users from existing customers.”

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