Microsoft Crowds the Cloud With AI, Expansion Focus

Phil Harvey

Microsoft launched its Windows Server 2003 operating system 15 years ago this week as the company aimed to help businesses host and run web applications more easily.

Three years ago, it completed its acquisition of Nokia's Devices and Services business. But you didn't hear much about mobile devices or website hosting on Thursday's earnings call. Microsoft, as much as anything else, is a cloud computing company now and a service provider in its own right.

Microsoft reported third quarter earnings of $0.95 a share on revenues of $26.82 billion, beating Wall Street's estimates by $0.10 a share and $1.05 billion, respectively. The company's revenues grew by $3.6 billion (16%) across all segments. (See Cloud Growth Propels Microsoft to Revenue Gains).

But its cloud computing numbers stood out yet again as the company reported Azure revenue growth of 93%. The company's Intelligent Cloud group, which includes server, and enterprise products and services, reported revenues that were up 17% to $7.9 billion.

During the quarter, Microsoft's commercial cloud revenue was $6 billion, up 58% from the year-ago quarter. In 2017, Microsoft had $15 billion in commercial cloud revenue for the entire year; the division brought in just over 28% of the company's revenues that year.

Referring to the company's investments in AI and cloud, Satya Nadella, Microsoft's CEO, said Microsoft has "made the right investments and they're having an impact, increasing our overall share in an expanding market."

He added that more infrastructure and a sharp security focus was going to give Microsoft an edge in cloud services.

"Our recent data center expansion, including the United Arab Emirates and Switzerland, brings our total number of regions to 50, more than any other cloud provider. The additional availability zones provides the most comprehensive resiliency in the industry," Nadella said.

— Phil Harvey, US News Editor, Light Reading

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4/26/2018 | 10:26:38 PM
Re: Xbox Live numbers
I didn't know XBox live came with TV shows, apps, and movies. I thought it was strictly for online multiplayer access. I also haven't looked at subscription benefits since buying an XBox 360...
Phil Harvey
Phil Harvey
4/26/2018 | 6:22:12 PM
Intelligent Cloud growth expected
Microsoft CFO Amy Hood projected that revenues for company's Intelligent Cloud segment would be between $8.95 billion and $9.15 billion for next quarter. 
Phil Harvey
Phil Harvey
4/26/2018 | 6:21:16 PM
Xbox Live numbers
Side note about Microsoft as a service provider: its Xbox Live monthly active users now number 59 million. Those subscribers get online multiplayer gaming, as well as TV shows, movies, music and apps. 
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