Three years ago, Microsoft didn’t generate as much money as the American multinational technology company does today. But, somehow, the company knew it was going to make it.
Just a year after Satya Nadella became Microsoft CEO, he said that he wanted the commercial cloud business to achieve a goal at the end of 2018 of more than the double of 2015 revenue. This Thursday, in the Microsoft’s fiscal first-quarter earnings report, the same Nadella announced that the company exceeded its $20 billion goal, with three extra quarters — quite impressive compared to the 2015 $6.3 billion annual revenue.
Microsoft has impressively experienced a positive line in its finances these last years. Last year, the American company said that its quarterly earnings were $20.4 billion with a profit of $4.7 billion — meaning a 94.5 percent of its 2018 goal. This year, it increased to $24.5 billion and $6.6 billion, way succeeding its goal even with other quarters left.
Since today, the American company will stop informing people about its commercial cloud business’ annual revenue. Beginning now, Microsoft will just report the actual total revenue.
This is the first time that Microsoft overcame itself when talking about Office 365 business. The company announced that it received more profits from selling subscriptions to the cloud version of its productivity suite than selling licenses to the traditional versions of Office.
However, it’s still too early for Microsoft to feel a total relief. The competition is pretty heavy, and the company has to do a great job to maintain itself in such a high place. There are other companies not far from where Microsoft is at, so it can barely blink or turn its head back.
Amazon is almost taking Microsoft’s spot
Companies like IBM, Salesforce, and Alphabet, are catching up with billions in its own revenues. The e-commerce company’s Amazon Web Services unit plans to have $18 billion of revenue at the end of 2017, very proximate to Microsoft’s.
It will be just a matter of time to see if Amazon achieves a better goal than Microsoft’s. However, we can be sure that the battle won’t be quiet anytime soon.
Not everything is good news for Microsoft. Revenues from the cloud might be something that will soon leave Microsoft at a really high spot. But right now, the American company neglected parts of Microsoft’s PC division.
Microsoft this year could only make $9.4 billion from Windows, gaming, and other PC businesses. According to the company, its flat overall is due to reduced patent licensing revenue. However, it’s also because Microsoft experienced a drop of $315 million in phone revenues since the company stopped producing the devices.
Each year, experts estimate, the company over exceeded itself by 12 percent in sales. Microsoft said that it is all because of the new Surface Laptop. This converts the Surface’s revenue to $1 billion this quarter.
When talking about Xbox, Microsoft said that it experienced a decrease due to the few people who bought the console, although the company even lowered its price. However, Xbox Live transactions saved the overall revenue, which increased by 21 percent.
Source: Business Insider