Microsoft Presses Ahead With Its Cloud Strategy

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This morning at its Windows Partner Conference, Microsoft made a lengthy pitch to its assembled clients that the cloud isn’t the future, but rather the present.

The company presented its cloud products and services as a way for partner companies to generate more revenue and land more customers. Microsoft, however, wasn’t overly boastful during its speech — instead, the company described itself as something akin to an insurgent player, scrapping for new market share.

Hardware

COO Kevin Turner highlighted the fact that the PC ecosystem remains a roughly 300 million unit market, of which Microsoft controls more than 90 percent. But of the larger devices market, Microsoft controls a far more modest 14 percent. That’s the number the company says it is focusing on.

Turner argued that when you have 90 percent market share, your work is mostly aimed at preserving your perch. When you have 14 percent, you view the market slightly differently.

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Microsoft’s recent focus on devices and services was in full repair during the speech, with the company’s executives weaving between devices — Surface Pro 3, Windows Phone, partner-OEM tablets and so forth — and its cloud-based software — Office 365, its CRM tools, Sharepoint, and Azure.

Software

As TechCrunch has noted in the past, Microsoft’s enterprise cloud tools have led to a gravity shift at the company, with its revenues painting a new direction for the company. Turner said that Sharepoint is now a $2 billion business and that Office 365 is the company’s “fastest-growing commercial product ever.” And Azure picked up 42,000 new customers in its fiscal 2014. It’s currently picking up 1,000 new customers a day, according to the company.

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Microsoft admitted that the changes it’s introducing haven’t been easy for the company. It specifically stated that its decision to not charge royalties for Windows-based devices that have screens smaller than 9 inches was nettlesome. But, the company noted, following that choice, OEM activity to build small Windows devices has picked up.

The company claimed that it won back 785 customers from Google in the past 18 months.

Direction

In some places, Microsoft is leading. Office 365 appears to be whatever the equivalent of a hit is in enterprise software. Azure is healthy, but lags behind its key competition in terms of mind and market share. Windows Phone, an important part of the company’s mobile vision, ambles along, but its lack of quick growth is evidenced in that desultory 14 percent figure. Windows on tablets retains minor market share. That could change this year, with Microsoft promising cheaper laptops and tablets running its operating system.

It’s hard to set a grade for Microsoft’s overall set of product progress, as the tools in question are quite diverse. But the company’s strategy isn’t hard to understand: It wants to sell cloud services across every platform, while building its own vision for what a platform — both software and hardware, or services and devices, depending on how you want to style it — should look like in the second half of the this decade.

Here’s the company’s stated plan, which it showed toward the end of the presentation:

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Today’s event was aimed at partners, the companies out there pushing Microsoft products. Microsoft still sells quite a lot of its traditional product through its traditional channels. But it thinks that it can make more money selling services, and it is currently working to convince its partners of the same thing.

IMAGE BY FLICKR USER ROBERT SCOBLE UNDER CC BY 2.0 LICENSE (IMAGE HAS BEEN CROPPED)