Microsoft just hit its $20 billion cloud goal, almost a year ahead of schedule (MSFT, AMZN)

pulse

October 26, 2017 10:22 PM

Microsoft's cloud business is a $20 billion beast, and it's still growing.

Microsoft's commercial cloud business just hit $20 billion in annualized revenue, a milestone CEO Satya Nadella set out for the company in 2015.
The growth of Microsoft's cloud business has been boosted by the cloud-based version of its Office 365 productivity suite and its Azure cloud computing service.
However, Azure still lags behind Amazon Web Services cloud in terms of revenue.

Microsoft CEO Satya Nadella called his shot

The software giant's commercial cloud business is anchored by Azure, its cloud computing service, and by the Office 365 productivity suite, both of which are growing like crazy. Azure revenue jumped 90% in the company's fiscal first quarter, compared with the same period a year earlier. And revenue from the business-targeted version of Office 365 grew 42% over the same period.

Still playing catch-up to Amazon

On the subject of Microsoft's cloud tear: Two quarters ago, Microsoft said that for the first time, the revenue the company generates from selling subscriptions to the cloud version of its productivity suite was higher than the revenue it brought in from selling licenses to the traditional versions of Office. That streak continues now.

Still, even with the growth and success of Microsoft's cloud business, it's still trailing behind Amazon. The e-commerce company's Amazon Web Services unit is on track to bring in $18 billion of revenue in 2017.

Nominally, that's less than Microsoft commercial cloud revenue, but it's not an apples-to-apples comparison. AWS competes directly with just Azure. But revenue from Azure is just one component of Microsoft's total commercial cloud sales.

Microsoft has dedicated itself to closing the gap. Whether it core cloud computing business will ever overtake Amazon remains to be seen. But it definitely looks like the battle won't be quieting down anytime soon.

pulse