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Why Azure Could Help Microsoft Gain Dominance in the Cloud Space

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Dec. 4 2020, Updated 10:53 a.m. ET

Azure is driving Microsoft’s success in the cloud

So far in this series, we’ve discussed various initiatives and partnerships announced by Microsoft (MSFT) to strengthen its position in the cloud. In March 2017, Microsoft announced a variety of improvements to its Azure SQL Database, including increased storage limits.

In fiscal 2Q17,[1. quarter ended December 31, 2016] Microsoft’s Azure revenues rose 93%, and its computing usage more than doubled on a YoY (year-over-year) basis. In constant currency terms, this growth reached 95%. In fiscal 2Q17, Office 365’s commercial revenues rose 47% and the number of its consumer subscribers grew to 24.9 million. 

Azure is an integral contributor to Microsoft’s Commercial Cloud business, which had an annualized revenue run rate in excess of $14 billion. 

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Microsoft’s Intelligent Cloud grew 8% on a YoY basis to ~$6.9 billion in constant currency terms. It consists of Windows Server, SQL Server, and System Center as well as MS Azure, mobile tracking devices, and data centers. Microsoft’s server products and cloud services revenues grew 14% in constant currency terms.

Looking at the company’s recent initiatives, Microsoft seems well on its way to achieving $20 billion in an annualized revenue run rate by 2018 for its Commercial Cloud segment.

Azure’s differentiating feature

Azure’s growing prominence could be attributed to its independent underlying computing hardware configuration, which enables it to be accessed with any end-user device. Microsoft’s offerings are preferred by many customers because the company is already known for its expertise in Windows servers, software for client-owned data centers, and its own public cloud.

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