Why Microsoft may be the winner of the cloud wars
Today’s Microsoft continues to regain trust amongst technology professionals, as it embraces the open-source solutions and puts in substantial efforts developing new products and services.
avatar
Valdas S. London based head of technology during the day, writer at night. Valdas writes about finance, economy, and technology.
2020-11-09 13:30

Microsoft’s ($247.63|0.47%) shareholders had it very nice for the last few years. The stock prices are growing, the company is getting bigger and stronger, and it continues to hold strong positions in gaming, developer solutions, and even hardware.

The question nowadays is not whether the company is successful, but if it can continue to grow and deliver the returns, investors have gotten used to over the recent years. Most eyes are focused on Microsoft’s cloud solution, one of the most strategic units of the business.

Currently, Microsoft’s revenues from the cloud are half (estimated $23.6 billion in 2020) of what Amazon manages to bring in ($46.1 billion).  Amazon was the first one to enter the race while also getting a competitive advantage. Other players, such as Google, Oracle, or Alibaba more recently, aren’t even in the same league, even though earnings are in billions.

So why Microsoft could beat Amazon AWS in its own game and even surpass it? Firstly, Microsoft is no longer the company it used to be in the early 90s. Back then, it was often no.1 on the list of the most hated companies amongst tech people. However, since the company’s current CEO, Satya Nadella, took over from Steve Balmer in 2014, things became very different at the company.

Today’s Microsoft continues to regain trust amongst technology professionals, as it embraces the open-source solutions and puts in substantial efforts developing new products and services. This part is vital for the company.

For other vendors, such as Amazon or Google, this is less important, as a developer working with their solutions may not work with related products they may offer. Microsoft, on the other hand, provides cloud solutions, including storage, computing, AI, and many others, but also a wide range of software developer-focused tools that are used by many businesses around the world. Microsoft successfully maintains the balance between the commercial needs and being able to appease to the increasingly vocal tech community that is happier about Microsoft’s business decisions than ever before.

Secondly, it is crucial to understand that if ten years ago, cloud computing was still a novelty, it has been becoming a commodity offering ever since. A growing number of vendors and closing feature gaps means lower profitability and easiness to switch between providers.

Microsoft is in a better position than any other competitor, as it can offer the most comprehensive suite of products and services that it continues to integrate for a seamless experience. For businesses, it can be very appealing, as it reduces the need to connect multiple services from multiple vendors that are rarely easy and inexpensive.

Despite Google’s inroads into the modern-day office with its G Suite, Microsoft continues to dominate it by introducing even more services, even to its most straightforward service packages.

Microsoft’s strategy paid off- in less than a decade, it completely reshaped its image, and it may even be seen as a role model for other tech companies.  Rich ecosystem, support of open source technologies and added value solutions will help Microsoft not just keep its current position but also to come out as the ultimate winner of cloud wars.


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2020-11-09 13:30

avatar
About the Author
Valdas S. London based head of technology during the day, writer at night. Valdas writes about finance, economy, and technology.

$247.63
$1.16 0.47%
Perf. YTD 11.54%
52W high -5.91%
52W low 42.39%
PE Ratio 33.74
MKT Cap 1.87T



Why did Pinterest and Microsoft Fall after Earnings?
Earnings season is upon us and several big tech companies began reporting their earnings this week.
By Mike Sakuraba | 1 week ago

Amazon's big shake up
On Tuesday after the closing bell, Amazon announced its Q4 earnings report which blew the doors off of Wall Street’s expectations.
By Mike Sakuraba | 3 months ago

Microsoft announces a 9.8% increase in quarterly dividend
Microsoft has a consensus 'buy' rating on its stock.
By Khan | 7 months ago

Is Microsoft a Buy?
Microsoft has its hands in a lot of cookie jars so to speak, but at its current stock price, is there any way that the tech giant is over inflated?
By Mike Sakuraba | 8 months ago

Getting rid of Moore’s Law. How to invest in Quantum Computing
Quantum is a new exciting industry that has the potential to rock today's world.
By Alejandro | 9 months ago

Microsoft Cloud Strength Drives Fourth Quarter Results
The revenue beat was powered by gains in its More Personal Computing unit, as more people globally turned to its products to work and game remotely during coronavirus-induced lockdowns.
By Staff | 9 months ago