Microsoft Corp has recorded a revenue of USD 51.7 billion with a net income of USD 18.8 billion in the second quarter. The tech conglomerate’s Intelligent Cloud Computing division logged 25.5% growth compared to the corresponding quarter last year.

Microsoft Cloud has seen consistent growth year after year. In the previous quarter, ended September 30, 2021, the company’s revenue from Office Commercial products grew by 18% and the Intelligent Cloud Computing reeled in USD 17 billion.

Of late, Microsoft has acquired Activision Blizzard to push its Metaverse ambitions, and cloud is a big part of its long term play.

AWS takes the lion’s share of the USD 130 billion cloud infrastructure services market with 32% of the total pie– more than the market cap of Azure and Google Cloud combined. 

Competitive edge

Last year, CRN’s Cloud Barometer survey asked service providers to rank the top three cloud platforms in terms of product capability, profitability, pricing maturity, lead sharing and support for demand generation. Microsoft Azure was ranked first in the fields of product capability, profitability and maturity of pricing.

The survey participants favoured Microsoft Azure for its proven partnering records. Meanwhile, the Goldman Sachs IT Spending Survey in 2020 showed a similar outcome. While AWS led the charge, Azure came out as the most popular cloud infrastructure supplier, again. The survey asked clients to poll their vendors in two areas: IaaS (Infrastructure-as-a-Service) and PaaS (Platform-as-a-Service), and Microsoft topped both ratings. 

Solid head start

The cloud landscape has undergone seismic changes over the last decade. According to a Gartner study, AWS was five times the size of 14 of its competitors combined ten years back. The online retailer essentially created the cloud computing services market as we know it when, in 2006, its subsidiary, Merchant.com, started helping third parties to build their own websites. 

AWS has engaged in competitive pricing since its launch, slashing rates more than 50 times. While Microsoft Azure and Google witnessed higher growth rates in the recent past, expanding a smaller customer base is easier than doing the same with a much larger group. AWS reportedly is still growing at a solid 47% with USD 3.53 billion in earnings even as the growth rate dipped.

Aggressive expansion

AWS’ clientele has exploded to a million users including Netflix and Airbnb. Amazon is determined to build more data centers. According to a CRN report, it had spent close to USD 3.5 billion on its cluster of data centers in Virginia alone between 2011–2020. 

While all three ‘hyperscalers’ spend billions of dollars each year on growing their data centers (The 20 largest data centers in the world reportedly spent USD 38 billion in the first quarter of 2021), Amazon shells out the most money. AWS announced three new data centers in the Middle East in the first half of this year. A second data center in India (Hyderabad) will go live this year. 

Optimisation

“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning. We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform,” Microsoft CEO Satya Nadella said earlier. 

As much as 23% of the IT industry relies on cloud services and the percentage could double in the next three years. “Cloud will be foundational to scaling India’s digital journey. There’s been a massive growth in cloud services in India and across the world, on the back of the massive digital transformation happening across every industry. Reports by IDC predict the Indian public cloud services market to reach USD 10.8 billion by 2025, growing at a CAGR of 24.1% for 2020-2025. Last year, Microsoft introduced six industry-specific cloud offerings that deliver differentiated value by industry-Cloud for Financial Services, Healthcare, Manufacturing, Retail, Non-Profit and Cloud for Sustainability,” Dr. Rohini Srivathsa, National Technology Officer at Microsoft India stated.