A LOOK ON MICROSOFT’S CLOUD FORAY
Many companies are longing for the success that Microsoft Corporation currently has. For more than 40 years, it has thrived in the software industry and has evolved into one of the most prominent brands when it comes to technology. It’s stakeholders have largely benefited from their achievements, especially after their market capitalization have hit $409.1B last year, making them the third most valuable publicly-traded firm globally.
However, despite their accomplishments, the tech giant is forecast to face several conflicts in the coming years, specifically in their venture into cloud computing as a shift from their traditional software systems which is seen to become obsolete in the near future. It’s way of countering the looming problem will greatly shape their performance in the coming years.
The executives are well aware that they need to cope with the transition to cloud to fuel growth, especially since their established software business is expected to gradually disappear. They recognized the efforts of CEO Satya Nadella in ramping up revenues from internet services, although he admitted the shift must occur in a speedier pace because this will serve not only as a mere add-on to what they have now, but a crucial phase towards their progress. Increased spending and a revamp of sales and partnerships are among the measures eyed by the company’s management at present. They are currently eyeing preventive measures, having seen some of their peers suffer due to failure of keeping up with technological advancements.
By 2018, Microsoft has projected around $20B in commercial sales of cloud products, and is working on meeting this target. However, it’s chairman has expressed his concern about their late entry into the innovation. While their Azure platform released 100% in gains, it only accounted for $5.8B of the total $93.6B revenue in 2015, while the rest of their offerings such as power BI contributed a smaller fraction. The board members are currently assessing whether there are enough investments in the area and how the firm can better influence their partners to ship improved products.
An analyst suggested that for better leverage, it would be better for the business to team up with consultants to establish and handle their services. He emphasized its importance given that the company is lagging behind its main competitor Amazon in terms of installing cloud commodity. This is because most of their salespeople are short of experience regarding subscription-based accords, which comes with longer-term contracts.
A report released by the firm has given a glimpse into an extended path they will have to take into cloud computing. It also covered the potential costs behind the transition process, which includes expenses in constructing and running data centers.