By Prableen Bajpai and Azure Security News
Seven years ago, on March 24, 2014, Microsoft announced the upcoming name change for Windows Azure to Microsoft Azure. This change, which came into effect on April 3, marked a symbolic shift in Microsoft Corporation’s (MSFT) overall business strategy. The move reflected its focus to tap the demand for cloud, against the backdrop of a renewed vision for a “mobile-first, cloud-first, data-powered world” of its then newly appointed CEO, Satya Nadella. Over these years, cloud computing has become an integral part of Microsoft.
Here’s an overview of its journey so far, and how it’s working to boost Microsoft Azure.
In FY 2014 (July-June), Microsoft reported that its commercial cloud revenue hit a $4.4 billion annual run-rate. Within a year, it surpassed $8 billion annualized run-rate. It was around this time that Microsoft set an ambitious target of achieving $20 billion in commercial cloud annualized revenue run-rate in FY 2018. By FY 2016, its annualized revenue run-rate had exceeded $12.1 billion, and FY 2017 witnessed the figure cross $18.9 billion. Microsoft’s commercial cloud business delivered more than $23 billion in revenue in FY 2018, topping the ambitious goal it had set, nine months ahead of schedule. During 2019, $38 billion in revenue was posted while FY 2020 witnessed its commercial cloud surpass $50 billion in revenue for the first time. During Q2 FY 2021 (October-December), Microsoft reported a 34% year over year increase in its commercial cloud revenue to $16.7 billion.
Microsoft has been expanding its network of data centers to offer its cloud services to more customers. Currently, it has more than 170 global network Points of Presence (POPs). Microsoft is one of the four companies along with Amazon, Google and IBM with the broadest data center footprint. To deliver a great cloud experience, Microsoft’s global network (WAN) spans more than 165,000 miles connecting its data centers across 61 Azure, with edge-nodes strategically placed around the world. During the Q2 FY 2021 earnings call, seven new data center regions in Asia, Europe and Latin America were announced along with adding support for top-secret classified workloads in the U.S.
Microsoft has acquired around 210 companies since 1994; in recent years, MSFT has made key buys to help bolster its cloud services. In 2019, Microsoft acquired Movere, an innovative technology provider in the cloud migration space. During 2020, to enhance its capabilities for a 5G ecosystem, and support the telecommunications industry, Microsoft acquired Affirmed Networks and Metaswitch Networks. To ensure robust security capabilities, CyberX was acquired to complement the existing Azure IoT security systems. Aorato (2014), Adallom (2015), Secure Islands (2015), and Hexadite (2017) are some of its other acquisitions to strengthen the Azure security ecosystem.
More organizations are relying on cloud computing, from healthcare AI-assisted bots, to digital twins in manufacturing, to ecommerce in retail. The worldwide end-user spending on public cloud services is forecast to grow 18.4% in 2021 to total $304.9 billion, up from $257.5 billion in 2020, according to Gartner.
According to Microsoft’s annual report, “Today, leaders in every industry—including 95% of the Fortune 500—run on Azure.” Microsoft continues to expand its partnerships and deals. In July 2020, PepsiCo entered into a five-year partnership with Microsoft as its preferred cloud provider to accelerate PepsiCo’s infrastructure, ERP and data estate consolidation and modernization. Companies such as Bentley Systems (BSY), Honeywell (HON), and Johnson Controls (JCI) have collaborated with Microsoft to utilize technologies such as Azure Digital Twins to bridge the digital and physical worlds, creating simulations of factories to optimize their operations.
In January 2021, GM and Cruise partnered with Microsoft to leverage Azure to commercialize its unique autonomous vehicle solutions at scale. In addition, GM will explore opportunities with Microsoft to streamline operations across digital supply chains. In February 2021, Volkswagen teamed up with Microsoft for its software company Car.Software Organization to build a cloud-based Automated Driving Platform on Microsoft Azure and leverage its computing and data capabilities.
In other partnerships, SAP SE (SAP) and Microsoft joined hands to accelerate the adoption of SAP S/4HANA on Microsoft Azure. Together, both the companies are working to simplify and streamline customers’ journeys to the cloud. While Amadeus and Microsoft will harness cloud technology to create smoother travel experiences in the future.
Gaming is another area that has huge potential. In October 2018, Microsoft announced Project xCloud to build cloud gaming. During the Q2 FY2021, Microsoft surpassed $5 billion for the first time in gaming revenue.
With research and development efforts, initiatives, and partnerships, Azure has doubled its worldwide market share from 10% in 2014 to 20% in 2020. It is estimated that the “proportion of IT spending that is shifting to cloud will accelerate in the aftermath of the COVID-19 crisis, with cloud projected to make up 14.2% of the total global enterprise IT spending market in 2024, up from 9.1% in 2020.” This shift will create an opportunity for companies such as Microsoft, which is already enabling companies across industries to build their digital capabilities.