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Microsoft surges past $100bn in full-year revenues

Microsoft Azure Satya Nadella

Microsoft has unveiled its full-year financial results for 2018, with golden CEO Satya Nadella leading the company past the $100 billion revenue milestone for the first time.

It is now amazing to think this was a company which was struggling to adapt to the new world a few years back, but Nadella’s introduction and his stringent approach to cloud computing is paying dividends. He might not be the most charismatic leader in the technology world, but the numbers speak to themselves. $110.4 billion in revenues across 2018, a 14% increase, with the Productivity and Business Processes unit up 13%, Intelligent Cloud leaping 23% and More Personal Computing gaining 17%.

“We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft,” said Nadella. “Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation.”

Having taken a dominant position in the cloud market during the early days, Microsoft is continuing to tear-up trees at the front of the pack alongside AWS; over the course of the last 12 months the team expanded its global data centre footprint to 54 regions, claiming to be larger than any other competitor. Google might still be able to challenge, though the distance between the top two and everyone else is starting to look more apparent. Having re-established the company as a leader in the digital revolution, Nadella turning his attention elsewhere to build on the solid foundations; edge computing and conversational AI.

“I shared our vision for the intelligent cloud and intelligent edge a little over a year ago, a vision that is now quickly becoming reality and impacting every customer in every industry,” said Nadella during the earnings call. “Everything we have accomplished this year has been about accelerating our lead in this new era and the tremendous opportunity ahead. We focused on the right secular technology trends and growing markets and followed that up with solid roadmap execution.”

IaaS will continue to be the baseline business of the cloud business, though a restructuring of the sales team in recent months and accelerated focus on higher value services will be the cherry on top. The focus on AI and edge services will provide a new conversation with customers looking to capitalise on the connected era, which in turn requires additional storage and data, feeding the baseline cloud business once again. Utility is seen as a dirty word in some segments of the technology world, but it is very appropriate in cloud. Scale and accessibility is key in this business, a concept which Microsoft has grasped; the potential is almost limitless for the immediate future.

It might not be the sexiest part of the industry, but the public cloud is still an incredibly profitable and burgeoning area. Over the course of 2018, IDC predicts spending on public cloud services and infrastructure will reach $160 billion in 2018, a 23% increase from 2017. AWS might still be the leader in this space, though Microsoft is widely regarded as a clear second in the cloud race.

What is clear is the Microsoft strategy moving forward; the edge is critically important to the success of the business.

“I think vision that we have always had is that distributed computing in some sense will remain distributed. So, we don’t split this into, there is an edge computing, there is a cloud computing,” said Nadella. “The need for computing is on the secular basis going to increase. And as you need to reason over larger amounts of data, you need not only storage and compute to be co-located all over as the world get them embedded with computing, that’s what we are building for.”

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