Cloud vendors have finally acknowledged that a slowing economy has greatly impacted their profits, but Microsoft CEO Satya Nadella sees this as the opportunity to prove the need of public cloud.
One advantage of cloud computing is the ability to ramp up and down in demand. Microsoft’s latest quarterly earnings call revealed that this strategy could also help customers deal with growing energy costs.
The thing, though, is businesses need to keep the customer’s perspective in mind while they consider their options. To align their spend with what’s uncertain demand, companies are moving to the cloud and public cloud holds benefits such as helping offset risk.
Microsoft is doing well.
Nadella took the stage during Microsoft’s earnings report for the first quarter of their fiscal year, which ended in September. The tech giant quickly announced its growth with two established and new products before wrapping up the financial news.
Azure Arc has seen more than 8,500 customers grow in recent months. In the last year, Nadella says that the company’s revenue has increased by more than 100%. Azure Machine Learning is also growing significantly. And finally, GitHub has more than $1 billion in annual recurring revenue with billions of people using the service every day.
Research firm Gavekal cut their price target on Microsoft, while at least three investment banks report they are confident in Microsoft’s long-term abilities.
“Our thesis remains that the cloud and the underlying Office 365/Windows ecosystem is going to comprise a bigger and bigger piece of Redmond as time goes on,” Wedbush wrote in a report Wednesday. “We believe the shift to cloud is still less than 50% penetrated, and represents a massive opportunity for Satya Nadella & Co. as time goes on.”
Company representatives continued: “We’re confidant that Microsoft can ride out this economic storm and succeed by focusing on cost-cutting and strategic measures.
A Wednesday report by investment bank KeyBanc said that “despite the cyclical headwinds to Azure and Windows/ PCs, we remain bullish long term on MSFT‘s hyperscale cloud and integrated infrastructure stack, application development platform, and expanding business application portfolio.”
To improve productivity, a report from Credit Suisse predicted that small and midsize businesses may decrease spending on both hardware and software in the future. Microsoft’s enterprise mobility + security business is facing headwinds, and there are still plenty of places to make use of Office 365.
“We believe the negative impact of the current optimization cycle will likely weigh on near-term growth for 4-6 quarters, but with an upswing in new workloads that follow after.”
Here’s what Satya Nadella said during Microsoft’s latest earnings call.
