back to article Microsoft's Azure and Office 365 growth slows

Microsoft has reiterated its belief in a mythical annual income of $20bn from cloud despite growth in Azure and its apps-as-a-service business slowing. Chief executive Satya Nadella Thursday reiterated the existing belief Microsoft will hit £20bn “run rate” in cloud business for fiscal 2018. That’s the fiscal year after …

  1. TRT Silver badge

    Office 365 stinks.

    It's an awful product. Talk about alienating your established user base... they could write a book on it. Provided they can get their word processor to do the stuff that word processors used to do and millions of power users know exactly how to get to in the menus, like footnotes, indexing, keep-with-next, chaptering, style-based numbering, bibliographies, sections, column control, gutters, drop caps etc etc.

    It's still perfectly fine for the mindset who, say, like to centre a front piece title on the page by using paragraph marks, or who number all the figure captions by hand.

    1. Bob Vistakin
      Facepalm

      Re: Office 365 stinks.

      Correct.

    2. Andy Towler

      Re: Office 365 stinks.

      Azure also stinks. The situation is one of across-the-board stinkiness.

      1. Bob Vistakin
        Facepalm

        Re: Azure stinks.

        Correct.

    3. TheVogon Silver badge

      Re: Office 365 stinks.

      "In constant currency, Intelligent Cloud was up eight per cent"

      8% a quarter is ~ 47% growth a year.. So still on target for $20 billion from cloud in 2 years.

    4. HmmmYes Silver badge

      Re: Office 365 stinks.

      All the crap + trouble of Office, running on MS's cloud, with all its crap and trouble.

  2. J J Carter Silver badge
    Trollface

    MSFT have a cunning plan!

    That's right, Windows 10 Anniversary Edition will move to a very reasonable £100/yr subscription model.

    1. Will Godfrey Silver badge
      Happy

      Re: MSFT have a cunning plan!

      It probably will, but not for me!

  3. a_yank_lurker Silver badge

    Run Rates

    So Slurp says look at all this mythical money we would make if... Serious problem, if... never occurred and probably will never occur. On major problem, these sound like straight line projections which is at best wobbly if not fraudulent.

  4. Jack of Shadows Silver badge

    Trends

    Two quarters do not make a proper trendline unless you are using elementary school statistics. Their problem even assuming they grow a constant 6% a year, that's almost 12 years to double revenues which is far below the game they need to play.

  5. W. Anderson

    Rapidly changing (negative) dynamic for Microsoft

    The fact that Microsoft is feverishly attempting to integrate Redhat Enterprise Linux with Docker Containerization into Azure Cloud Computing, and they still have great difficulty competing with Amazon AWS and myriad Openstack based Cloud services , example report here:

    http://www.eweek.com/cloud/why-amazon-and-openstack-continue-to-thrive-in-a-complex-cloud-world.html

    is evidence of Microsoft incapability to stay abreast of these strongly surging Cloud Computing Services, many of which offer alternatives to Office365 without fees or at very low rate.

    This news, along with company's own report of very weak Windows Mobile sales - diminished to approximately 1% compared to Apple iOS and Android's combined 96% marketshare, has caused Microsoft market Capitalization to lose near 29% of it's value, and the many loyal Microsoft supporters on the Register, and ZDNet, still reside mentally in a delusion of their heroine regaining world domination like it did with PC desktops in 1990s.

    Sad!

    1. Anonymous Coward
      Anonymous Coward

      Re: Rapidly changing (negative) dynamic for Microsoft

      Clearly a MSFT hater.

      Microsoft lost 7% in market cap. It is still nearly a $400b market cap company, third largest in the world. MSFT's 1999, .com hysteria, peak was just under $500b market cap... so not really struggling. I think most tech companies would like to be in range of their .com bubble valuation.

      "Cloud business of Microsoft continue to show positive signs with Azure revenue growing by 120 percent, and usage of Azure compute and Azure SQL database more than doubling year over year."... and Office 365 grew by 63% YoY.

      Turn the lights off, guys. 120% growth. It's over.

    2. 1Rafayal

      Re: Rapidly changing (negative) dynamic for Microsoft

      what are you even trying to say?

    3. John Sanders
      Holmes

      Re: Rapidly changing (negative) dynamic for Microsoft

      The issue with Microsoft and anything they do lately, outside windows that is, is that suddenly they face themselves against a world that builds clever stuff based on aggregation of different open parts and protocols.

      And MS is well... MS and they can only thrive if they are the only ones with the keys to the kingdom, the corporate back deals and the pressure to the OEMs.

      Now they face a little dilema, if they keep maintaining Windows as their closed garden, more and more people on time will move more and more infrastructure to open standards.

      That's why they have embarked in this my little pony PR adventure of vomiting rainbows over anything Linux, claiming to suddenly be an OSS company that curiously does not ship, and does not intend to ship any flagship product as OSS.

      They are doing this in an attempt to blend themselves in, so people think Azure vs Google vs AWS is apples to apples.

      Yet at the same time they make grandiose plans to convert Linux customers into Windows customers.

      Anyway, MS like Amazon and Google do not make as much money as everybody thinks, and the lack of proper figures from most of them leads me to think that there are losses "somewhere in the clouds".

      1. Anonymous Coward
        Anonymous Coward

        Re: Rapidly changing (negative) dynamic for Microsoft

        I don't know where you are getting any of that.

        MS is embracing OSS because they want to be the universal cloud player, competing against AWS. I don't see any signs that they are not making OSS a priority. Would they rather sell Windows than Linux? I'm sure. IBM would rather sell mainframes than Unix servers. Oracle would rather sell Oracle than MySQL. They all recognize there is a wider world and if they don't get on board they will miss out.

        MS just announced that they are bring SQL to Linux. Office runs on Android. What "flagship product" are you waiting for them to move?

        Difficult to say how much MS makes on Azure, but Amazon makes a ton of profit on AWS. It is their most profitable division. Google isn't large enough to matter in cloud, but I think it is profitable for MS and Amazon. It is difficult to believe MS would be pushing everyone to go to Azure if it was a money losing proposition.

        1. TheVogon Silver badge

          Re: Rapidly changing (negative) dynamic for Microsoft

          "but Amazon makes a ton of profit on AWS. It is their most profitable division."

          Not sure where you get that from, but Amazon's financial results show AWS is a massive loss maker - and is the main reason they nearly never declare any profit.

    4. TheVogon Silver badge

      Re: Rapidly changing (negative) dynamic for Microsoft

      "The fact that Microsoft is feverishly attempting to integrate Redhat Enterprise Linux with Docker Containerization into Azure Cloud Computing"

      Microsoft are making it so that it integrates with Windows server too. Don't forget Microsoft have had a container solution for many years via SoftGrid / App-V so have a lot of experience in this space.

      Besides, Azure (Hyper-V) scales better and is more efficient than KVM, so it makes sense to run your Red Hat cloud on it too if you want Red Hat.

      This is why Azure is growing market share faster than AWS, and Microsoft overtook Amazon in cloud revenue a few quarters back.

  6. Anonymous Coward
    Anonymous Coward

    "£20bn “run rate” in cloud business for fiscal 2018"

    Dollars, not pounds. I thought they spoke American in England.

  7. Anonymous Coward
    Anonymous Coward

    Like I wrote above.... "Cloud business of Microsoft continue to show positive signs with Azure revenue growing by 120 percent, and usage of Azure compute and Azure SQL database more than doubling year over year."

    So if you're at $10b and the business is growing by 120% a year, not unreasonable to think you'll get to $20b in two years (meaning a 50% growth rate for the next two years). Office 365 is the other component of those commercial cloud revenues and it grew by 63%. The growth rate will need to slow down as these business become even larger, but they are pretty large right now and blowing away the 50% growth rate they need to achieve to hit that goal.... so not sure why El Reg thinks it is just ridic.

    Microsoft "intelligent cloud" does not equal cloud. It equals cloud plus Hyper V and all manner of so called "private cloud" products (VMware's wacky, self serving definition). Microsoft "commercial cloud" equals real cloud (Azure plus O365)... as a service. El Reg doesn't seem to understand the difference.

    1. TheVogon Silver badge

      "Microsoft "intelligent cloud" does not equal cloud. It equals cloud plus Hyper V"

      Hyper-V Server is a completely free product. Zero cost with all features enabled.

      Microsoft's "intelligent cloud" in terms of reporting does NOT include on customer premise solutions.

  8. David Lawton

    We have 500 users on Office 365. (Almost all on iOS or Mac OS X) Some bits i like other bits make me want seriously rage at Microsoft.

    Onedrive? What a F*ckin mess! Dropbox seem to manage it fine but the biggest software company in the world still cannot get it right.

    Then on Office 365 we have Word, Excel, Powerpoint, One Note, OneDrive and Outlook that seem to be on all platforms, yet Android, iOS and Mac OS don't seem to get Viso, Publsher, Access or Project.

    If they want Office 365 to shine sort out sharing in Onedrive and make all the Microsoft Office suite products platform neutral they brought One Note from being Windows only to other platforms (I'm guessing because Evernote was becoming popular) so no excuse to not do the missing programs. .

    1. Anonymous Coward
      Anonymous Coward

      Agree on OneDrive. MS needs to sort that out. I like O365 generally. It's the best enterprise collab/email out there IMO.

      MS apps are always going to come out on Windows first. Just like Google apps are always going to work best on Android. Oracle DB is coming out first on Oracle Linux. IBM DB2 works best on mainframe. SAP is just ramming wildly overpriced HANA down peoples' throats. That the way the software industry has always worked... App providers pick platforms and down stack. People basically need to deal with it or get a new app.

  9. boboM

    Revenue is not margin

    Don't forget they are talking revenue here, not margin.

    The margin on 'shrink-wrap' on premise was over 90%, in this cloud business they be lucky to make 3% if they're not losing money already.

    They're up against Amazon, notorious for their loss leaders and wafer thin margins.

    Even if they make their 'revenue' targets, MS will never again make the profits that they were used to. And rightly so, no more monopoly rents.

    As their mobile endeavours show, they cannot compete on a level playing field. Trying to stay relevant is the game now.

    It's great to watch.

    1. Anonymous Coward
      Anonymous Coward

      Re: Revenue is not margin

      Amazon makes 25% net margins on AWS. About the same as MS and company make on software.

      1. TheVogon Silver badge

        Re: Revenue is not margin

        "Amazon makes 25% net margins on AWS."

        Amazon's annual and quarterly reports show large on-going losses on AWS. You could argue that this is due to massive on-going investment, but anything suggesting it's currently "profitable" is quite clearly not the case.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019