The year 2022 left Silicon Valley bruised and battered at the stock market, and Microsoft was not spared the blow either. The tech giant’s stocks were down 29% last year. The company ended the 12 months with a market cap $726 billion lower than the beginning. On December 31, Microsoft’s market capitalisation stood at $1.79 trillion. 

Besides this, Microsoft did well in terms of revenue. In fact, the tech giant began 2022 with the announcement of its deal to acquire Activision Blizzard. It also debuted its first major Windows 11 update in 2022.

Further, according to the Flexera State of the Cloud report, in 2022, the usage and adoption of Azure exceeded that of AWS in several areas. However, in terms of market share, Azure remains the second largest cloud services provider, behind AWS. 

Let’s take a closer look at how Microsoft fared in 2022 and what to expect from the tech giant in 2023.

Strengthening its gaming play 

Early 2022, Microsoft announced one of the biggest acquisitions in the history of video gaming. The deal to acquire Activision Blizzard, even though mired in controversy, could possibly make Microsoft the third-largest gaming company in the world. The acquisition is supposed to bring Microsoft several benefits, including recurring revenue and metaverse opportunities. Activision has created many popular video games, such as Call of Duty, World of Warcraft, Diablo and Overwatch, among others.

However, the crown jewel for Microsoft is King, a mobile game developer company owned by Activision, which developed the popular mobile phone game Candy Crush. Candy Crush alone generated operating revenue of around USD 1 billion in 2021. Further, it also generated around USD 7.1 billion in player spending between 2014 and 2021.

However, the Federal Trade Commission (FTC) blocked the deal in December, saying the purchase could “harm competition in multiple dynamic and fast-growing gaming markets”. The FTC is worried that Microsoft would restrict ‘Call of Duty’ to their Xbox after acquiring it. Currently, the game is available on Xbox and PlayStation.

On the AI front

Last year, Microsoft’s research team unveiled a new Turing Universal Language Representation model that can achieve state-of-the-art capabilities in both English and multilingual understanding tasks.

Meanwhile, Microsoft’s Asia research team introduced NUWA-Infinity, which is a multimodal generative model designed to generate high-quality images and videos from any given text, image or video input. NUWA-Infinity has superior visual synthesis capabilities compared to its predecessor in terms of resolution and variable-size generation.

The same team, along with researchers from the Microsoft Turing team, also introduced BEiT-3, a general-purpose multimodal foundation model that achieves state-of-the-art transfer performance on both vision and vision-language tasks.

In 2022, Microsoft open-sourced three versions of its Grounded Open Dialogue Language Model (GODEL): small (GODELB), large (GODELL) initiated from T5 and T5-Large, respectively, and a very large model (GODELXLGPT-J) trained off GPT-J. GODEL evolved out of Microsoft’s 2019 DialoGPT project, the first large-scale pretrained language model, designed specifically for dialogue. 

Further, OpenAI, a company Microsoft invested USD 1 billion in, released popular AI models such as DALL-E2 and ChatGPT in 2022.

Revenue

Last year, Microsoft recorded revenues of around $198 billion, up by 18% year-on-year and $83 billion in operating income. Its net income stood at $72.7 billion, up by 19% year-on-year. Microsoft generated around $44.9 billion from Office products and services, which account for nearly 23% of its revenue. Cloud business Azure bought in around $44 billion, accounting for around 22% of Microsoft’s revenue.

From Windows, Microsoft generated revenues of around $25 billion, which was 12% of its revenue. Further, Microsoft made $13.9 billion from LinkedIn, around $7.4 billion from enterprise services, $16.2 billion from gaming, $11.6 billion from search advertisement and $7 billion from devices.

What to expect in 2023

One of the biggest things to expect in 2023 from Microsoft is the integration of OpenAI’s conversational AI chatbot ChatGPT with Microsoft’s search engine. Integrating ChatGPT with Bing will give the search engine an edge over Google Search, the popular search engine, which holds a global market share of more than 90% compared to Bing’s 3.19%, according to StatCounter.

Microsoft will end the support for Windows 8.1 in January 2023. Further, support for ​​Office 2013 will end on 11 April 2023.

In 2023, Microsoft will focus on improving its security features and providing more streamlined and cost-effective solutions for businesses. Microsoft Azure is also expected to continue to expand its Internet of Things (IoT) and edge computing offerings.