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 ($415.5|0.45%) 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.

Why Microsoft may be the winner of the cloud wars

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.

Rate this article

positive
negative
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.

$415.5
$1.860.45%
Perf. YTD11.35%
52W high-0.90%
52W low71.14%
PE Ratio37.57
MKT Cap3.09T

Analyst Ratings
Target Price$296.91
# of Analysts45
Last updated2022-12-19

buy-coffee
You've read 1 article in the last year
..thank you for supporting us and for visiting our site. Unlike many other sites, The Dog of Wall Street is available for everyone to read. Our focus is to provide great content for free. Do you like what we are doing? Buy us a cup coffee. It is the fuel that keeps us going..

NVIDIA Earnings: Will They Even Matter?
Let’s examine the bear and bull case for NVIDIA’s earnings next Wednesday.
By Mike Sakuraba | 2 weeks ago

2 Stocks I'm Avoiding as Markets Hit New All-Time Highs
People like to throw around the term bubble a lot when the market goes up a large amount in a short time. But is it really a bubble or did they just miss out on the action? I usually say it’s the latter.
By Mike Sakuraba | 3 weeks ago

2 Earnings Calls I'm Watching Next Week
It’s been a while since I’ve done this but it was a good practice and forced me to actually listen to the earnings calls of companies I invest in.
By Mike Sakuraba | 3 weeks ago

2 Stocks You Can Still Buy at All-Time Highs
For some reason, we have always been taught to try and buy low and sell high. While that might seem logical, it is a good way to miss out on buying some of the best stocks.
By Mike Sakuraba | 3 weeks ago

24 Assets to Invest in for 2024: Part 7
In Part 6, I spoke about chip stocks, Axon (NASDAQ: AXON),Celsius (NASDAQ: CELH),and the iShares Bitcoin Trust (NASDAQ: IBIT).
By Mike Sakuraba | 4 weeks ago

2 Stocks I'm Buying When Markets Pull Back
Here are 2 stocks I’m prepared to pull the trigger on as soon as the market pulls back.
By Mike Sakuraba | 4 weeks ago

24 Assets to Invest in for 2024: Part 8
In Part 7, I spoke about Rivian (NASDAQ: RIVN),Chainlink, and Evolution AB (OTC: EVVTY)
By Mike Sakuraba | 4 weeks ago

Tesla Bears Rejoice: Another Bad Quarter from Tesla
I think the next year or two is going to be tough for the company and the stock.
By Mike Sakuraba | 1 month ago