Azure Cloud Grows 89% in Past Year to Surpass Google Cloud in Market Share
Microsoft held their annual Inspire conference for tech partners in Las Vegas this July, combining the event with the Ready convention held annually for employees. The week culminated with CEO Satya Nadella releasing the yearly sales results and financial report for Wall Street which disclosed that the company’s annual revenue had surpassed $100 billion USD for the first time in their corporate history. Microsoft shares hit a record high of $108.20 on NASDAQ, valuing the company at over $800 billion USD.
CNBC reported that Apple, Microsoft, Google/Alphabet, & Amazon are all in a race to become the world’s first trillion dollar company. Azure led Microsoft’s Intelligent Cloud division by recording sales growth of 89% in the last quarter, compared to sales of Office 365 subscriptions which rose 38%. In contrast, sales of Windows web server software remained stagnant with only a slight rise in sales of their premium server versions and hybrid solutions. Customer euphoria over the booming Azure Cloud product line was evident at the Microsoft Inspire conference which included five days of seminars from business leaders and tech experts on a wide range of subjects ranging from digital transformation, government innovation, & artificial intelligence to telemedicine, healthcare, trends in education, chatbots, & IoT. There were also numerous seminars on Kubernetes, DevOps, serverless platforms, geospatial/maps, Visual Studio, SQL Server, Big Data, B2B, CosmosDB, SaaS/IaaS, & gaming presented around Microsoft Azure solutions. A total of 589 sessions from the event have been recorded that can be watched for free on the Microsoft Inspire website, forming a valuable resource for programmers, developers, business owners, students, and entrepreneurs. The event also featured an awards ceremony for ecosystem standouts with 39 categories, where AT&T, Accenture, Larsen & Toubro, Cognizant, Cloudera, Ensono, & Xpirit all bagged major prizes for their innovative work in the software industry.
The New Microsoft Under CEO Satya Nadella Surpasses Google in Cloud Market Share
For cloud industry analysts, Microsoft’s latest corporate earnings and Azure product announcements introduced at Inspire 2018 were eye opening. As the New York Times reported, “core cloud business is a $60 billion-a-year market, which grew by 50 percent in the first quarter of this year, according to Synergy Research Group. In that fast-growing market, Amazon holds a 33 percent share, unchanged since the end of 2015. Over the same span, Microsoft’s share climbed from 7 percent to 13 percent, and Google’s doubled to 6 percent.” The ham-fisted regime presided over by Steve Ballmer, the Nokia acquisition failure, and even Bill Gates’ Windows/DOS empire based on closed-source desktop software monopolies all seem distant memories in comparison to the new Microsoft driven by Azure Cloud. According to Forbes writer Peter Cohan, “A Morgan Stanley poll of 100 U.S. and European CIOs found that 34% planned to buy a more expensive tier of Office 365 software in the next one to two years and 70% were or were planning to use Azure. Bernstein found that as of June 2018, 62% of CIOs said they used Azure (an increase from 50% about a year earlier) while 60% used Amazon Web Services.” Like AWS & Google, Microsoft is investing heavily in cloud AI/ML/DL integration to drive Big Data analytics, IoT, and a next generation of software applications for business transformation. Enterprise IT continues to remain loyal to Microsoft on the basis of legacy good will, brand identity recognition, the need for corporate data security, and software/hardware platform integration. This is translating into a tremendous uptake of Microsoft Azure’s new product lines as the Fortune 500 continues a major transition to cloud data center outsourcing.
One of the key paradigms being promoted by Nadella is “ubiquitous computing” developing as a consequence of the next generation of mobile smartphones, tablets, edge servers, and “always connected” IoT sensor devices. Nadella has made major headline acquisitions of LinkedIn ($26 billion) and GitHub ($7.5 billion) under his tenure which extend Microsoft’s footprint in social networking and open source development, as well as the purchase of Minecraft/Mojang in 2014 for $2.5 billion USD. Gaming earned Microsoft $10 billion in revenue in the last year, where Nadella stated: “In gaming, we’re pursuing our expansive opportunity from the way games are created and distributed, to how they’re played and viewed, surpassing ten billion revenue this year for the first time. We’re investing aggressively in content, community, and cloud services across every end-point to expand usage and deepen engagement with gamers.” The revenue Microsoft earns from gaming & the Xbox is actually slightly more than it receives from the Intelligent Cloud division, and almost enough to cover the entire $13.6 billion in capital investment expenditures required by the company in annual operations. For example, Office 365 reports around 32 million subscribers while Xbox Live has somewhere between 57 and 59 million active users. Microsoft has also invested aggressively in acquiring Big Data, AI, mobile utility, HPC, cybersecurity, professional networking, & communication start-ups under Nadella.
Microsoft Inspire 2018 – Las Vegas: Keynote Addresses & Corenote VIP Presentations
With nearly 600 different workshops, seminars, speeches, presentations, and ceremonies taking place at the Microsoft Inspire 2018 gathering in Las Vegas, nearly every niche of the vendor supply chain and ecosystem partner network was represented. Most important were the daily keynote and corenote addresses from senior Microsoft executives, major IT service companies, and leading software developers. For those who do not have time to watch the entirety of the keynote addresses, the highlights from day one, day two, & day three will give some sense of what it is like to attend the convention. Over 18,000 people from 132 countries traveled to Las Vegas for the events, with the highest level 5-star executives of the Fortune 500 and venture capital mingling with the über-geek contingent from enterprise programming teams, corporate data centers, network systems administration, & big-brand web development. The variety of new products and services available on Microsoft’s Azure Cloud were featured, along with promotions and announcements for core products like Windows, Office 365, the Xbox, Surface, Skype, LinkedIn, Cortana, Dynamics 365, & Yammer. Circus acts, comedians, DJs, & musicians entertained at the event, and 2018 “Partner of the Year” winners were announced to fanfare.
Microsoft Inspire Day 1 – Vision Keynote:
Dynamics of the Microsoft Partner Community: “Corenote speakers: Gavriella Schuster (Corporate Vice President, Commercial Partner Channels & Programs); Judson Althoff (Executive Vice President, Worldwide Commercial Business); and Brad Smith (Microsoft President and CLO).” Watch the Day One Keynote on Vimeo.
Microsoft Inspire Day 2 – Vision Keynote:
App Source, Azure Cloud, & Business Collaboration: “Corenote speakers: Gavriella Schuster (Corporate Vice President, Commercial Partner Channels & Programs); Jason Zander (Executive Vice President – Microsoft Azure); Alysa Taylor (Corporate Vice President Applications and Global Industry); and Anand Eswaran (Corporate Vice President of Business Applications and Industry Marketing).” Watch the Day Two Keynote on Vimeo.
Microsoft Inspire Day 3 – Vision Keynote:
Microsoft’s Partner-Led Sales Philosophy: “Microsoft CEO Satya Nadella on ‘the three key pillars in Microsoft: intelligent cloud computing, ubiquitous computing, and AI and people-centric computing.’ Session includes a demo of HoloLens and Dynamics Field Service.” Watch the Day Three Keynote on Vimeo.
Jason Zander (EVP @Azure): Zander reported 100% YoY Azure consumer revenue growth with 122% YoY Azure premium services growth. He said that Microsoft is a “partner led” company and that the growth was a testament to their partners’ hard work. Learn More.
Microsoft Inspire: Jason Zander Corenote – Highlights & Quick Facts:
- Each $1 spent on Azure hosting services fuels an average of $5 in partner sales.
- Rackspace has become a key partner with Microsoft, with 422% YoY growth of their Azure Cloud consulting services.
- Red Hat has launched a fully-managed OpenShift cluster server platform on Azure Cloud, which Zander touted as an example of Microsoft’s commitment to supporting open source solutions on industry demand.
- A ubiquitous computing network is key to the intelligent cloud. Microsoft Azure is “productive, hybrid, intelligent, & trusted” with 54 international regions in their coverage footprint (4500+ peering locations & 130+ edge sites).
- Microsoft is investing in installing their own undersea fiber optic cables to operate their data centers independently of big telcos.
- Microsoft Azure now offers a comprehensive portfolio of virtual machine products including: burstable, general purpose, compute intensive, storage optimized, memory optimized, graphics intensive, HPC, & SAP HANA options.
- Purpose-built infrastructure for enterprise “mission critical” workloads such as those run by SAP, NetApp, & Cray represent an important focus for the future of Azure services.
- The Azure stack can be run on edge servers anywhere under hybrid/multi-cloud models.
- Azure Migrate helps businesses to move legacy apps to the cloud as part of the process of digital transformation.
- Azure Hybrid (with reserved instance) is the most cost-effective way to run Windows Server + SQL in the cloud, which is not available on AWS or Google.
- Visual Studio Code is used by over 1.5 million developers every day. GitHub, soon to be owned by Microsoft, supports over 22 million open source developers every day.
- Microservices, Kubernetes, & Serverless solutions (FaaS) are being brought to market by Azure at an enterprise level.
- SQL DB, PostgreSQL, MySQL, Redis Cache, & CosmosDB are the main DBaaS products available on Azure under a fully managed approach.
- Some enterprises are migrating thousands of SQL-driven applications to the cloud on a single account.
- Azure SQL DW (Data Warehouse) works out to be around 30% cheaper for businesses than AWS Redshift.
- Azure CosmosDB is the fastest database on the platform with global scale and support for MongoDB, Gremlin, Spark, & Cassandra via API.
- Integrating AI into apps to make businesses more efficient is easier through Azure’s pre-built cognitive services.
- Azure Databricks is an Apache Spark-based analytics platform for transforming big data into business intelligence.
- Azure Machine Learning supports frameworks such as TensorFlow, PyTorch, Caffe2, Keras, MxNET, & Cognitive Toolkit with pre-built AI model packages.
- Azure Machine Learning deploys directly to Kubernetes for app orchestration using Docker containers. This pipeline allows software developers to use Azure platform tools in conjunction with CI/CD project management requirements.
- Azure IoT Hub currently processes over 1 trillion messages per day from internet-connected devices.
- Azure Sphere is a micro-control chip inspired by Xbox technology sensors that integrates natively with the Azure stack for IoT app development and includes thousands of partner devices in the ecosystem.
- Watch the Microsoft Inspire 2018 Day Two Corenote.
Focus On Partners: “Microsoft disclosed that co-selling efforts with partners have generated $5 billion in partner sales to date, while the company has supplied partners with more than 1 million customer leads since Inspire last year. Microsoft also said it now has 72,000 cloud partners in total, and reports that Cloud Solution Provider (CSP) revenue is up 234 percent compared with a year ago. The $5 billion in partner sales is a “really good start to this motion, but it’s only just the beginning,” Microsoft Channel Chief Gavriella Schuster said in a briefing with reporters Thursday.’ Learn More About Microsoft’s Announcements At Inspire 2018.
Partner Innovation – Growth & Differentiation: “Organizations around the world are undergoing transformation fueled by cloud, artificial intelligence, mixed reality, and the Internet of Things. These technologies are helping businesses and society reach new heights – retail is becoming more personal, banking is becoming more seamless, and healthcare is becoming more predictive and preventive. At the heart of these incredible stories of transformation – and more – are Microsoft partners. The Microsoft partner ecosystem is a group of hundreds of thousands of organizations driving positive, global impact. Building everything from line-of-business apps to industry-specific solutions on Dynamics 365 to gaming experiences, these companies are a natural extension of the team at Microsoft, delivering cutting-edge technology to millions of customers.” Learn More About Microsoft Inspire 2018.