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Microsoft Seeks Innovative Technologies

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Microsoft’s urgency

Microsoft (MSFT) wants to expand its innovation in the field of AI, blockchain, IoT (Internet of Things), and data analytics. The evolution of high-speed 4G Internet service and shifting workloads from on-premise to the cloud platform by most of the organization has increased the demand. Connected devices’ growth is creating more opportunities for Microsoft.

According to the IDC’s research report, the spending in IoT will likely grow at a CAGR (compound annual growth rate) of 13.6% between 2017 and 2022 to reach $1.2 trillion. The report suggests that the consumer sector could witness the highest CAGR growth of 19%.

During the same period, the research firm also projected that worldwide blockchain spending will expand at a CAGR of 73.2% to $11.7 billion. In fiscal 2018, the spending in the blockchain business will likely reach $1.5 billion—up 100% year-over-year.

In order to tap the growing market, Microsoft needs to pick up the pace compared to its peers like IBM (IBM) and other tech firms. IBM has already gained traction in the blockchain market. IBM’s Watson AI platform is also winning many contracts for the company.

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What steps have been taken?

In order to remain competitive and accelerate its innovative product portfolios, Microsoft continues to acquire many startup firms like Bonsai and Semantic. Microsoft has also formed a strategic alliance with Qualcomm (QCOM), Intel (INTC), and C3 to deploy IoT and AI technologies. Microsoft decided to invest ~$5 billion in IoT solutions for five years. In the last five years, the company has spent nearly $59 billion in R&D (research and development). In the above chart, you can see the R&D trend in the last five years, which grew at a CAGR of 5.7%. Implementing these policies might help Microsoft remain competitive in the market.

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