“Mobile first, Cloud first” strategy
In February 2014, Microsoft (MSFT) announced that Satya Nadella would be the CEO. The whole world listened with bated breath as to how Microsoft’s future would be shaped under its new guide. According to Nadella, in his own words, Microsoft is “a productivity and platform company for the mobile-first and cloud-first world.”
Within 52 days of his joining the company, Microsoft launched Office suite for the iPad. The current motto of Microsoft is starkly different from the “devices and services” strategy of the former CEO, Steve Ballmer. According to IDC, by 2016, $1 out of every $5 spent on software is expected to be spent on cloud model.
The above chart shows the market share held by various players in the infrastructure as a service (or IaaS) and platform as a service (or PaaS) space in 2013. Amazon (AMZN) is the market leader in this segment holding, ~10% of the market, followed by Microsoft at 4%. In spite of entering late in the space, Microsoft is making its presence felt as it left Google (GOOGL) and IBM (IBM) behind in the cloud services market.
Increased presence in cloud and mobile space
Microsoft’s bold announcement to make Office apps like Office 365 and Office suite available for the iPad drew notable attention. With a million downloads, as reported by Microsoft, and growing popularity of Word, Excel, and PowerPoint on the iPad, the announcement shows that Microsoft’s decision was not a bad one. However, “Office 365 for iPad” seems a bit expensive, as Microsoft has to pay 30% commission for every subscription to Office 365.
In 2014, Microsoft reported that Microsoft Azure doubled its storage and tripled its computing capacity. Microsoft Azure is gradually and steadily making inroads into the cloud market.
Multi-year agreement with Cisco
Microsoft announced a multi-year agreement with Cisco (CSCO), a market leader, to modernize the data centers for enterprise customers and service providers. The partnership will aid Microsoft’s migration of Windows 2003 customers to Windows Server 2012 R2, which runs on the Cisco Unified Computing System (or UCS) platform.
The three-year “go to market” agreement is expected to be beneficial for both organizations. Under the agreement, Microsoft would provide the Cloud OS solutions, including Windows Server, System Center, SQL Server, and Microsoft Azure. Cisco, on the other hand, would provide the hardware like Cisco UCS and Cisco Nexus. This partnership will ensure a steady growth in the cloud space for Microsoft.
Strengthening of data centers would help Microsoft win more customers in the hybrid cloud space. In 2014, StorSimple data storage appliances were integrated in Microsoft Azure, which would speed up automatic capacity expansion and off-site data protection. In November 2012, Microsoft also acquired Stordata, a cloud storage company. The time spent on upgrades and data protection will be reduced, and faster data recovery will be possible in case of a disaster.