Last year Microsoft made a few bold promises. With their transition to a mobile-first cloud-first company was well under way, the decided to make a couple of goals. First, Microsoft set a goal with the launch of Windows 10. They originally envisioned their latest operating system to power 1 billion devices by 2018.
Last year they also promised that their commercial cloud services revenue would hit a run rate of $20 billion. What that last promise means is all of the revenue from Azure, Dynamics CRM Online, and Office 365 will hit an annualized rate of $20 billion per year.
As we reported last week, Microsoft now recognizes that it won’t live up to its first promise. The tech company felt that due to their plummeting Windows Phone business they wouldn’t be able to meet their goal of a billion Windows 10 devices by 2018.
The $20 billion dollar question
Yesterday’s earnings report confirmed that Microsoft’s other lofty goal is alive and well. Azure revenue more than doubled since last year, increasing by 102%. As Mary Jo Foley of ZDNet points out, Microsoft’s commercial cloud revenue has reached a run rate of $12.1 billion. That is up from $8 billion a year ago, an increase of more than 50%.
The growth is driven not just by Azure, but also Office 365 and Microsoft’s Enterprise Mobility and Security Suite. It will also be interesting to see how the recent announcement of Dynamics 365 will enter into the equation of increasing commercial cloud revenue when it launches later this year.
It must be disappointing to many in Redmond that they had to walk back their goal of one billion Windows 10 devices by 2018. But it is easier to swallow that hard truth when you have an emerging juggernaut of a business steadily on track.Further reading: Azure, Dynamics 365, Intelligent Cloud, Microsoft, Office 365, Windows 10