Microsoft Corporation Eying $20B A Year From Cloud By 2018

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Microsoft Corporation Eying $20B A Year From Cloud By 2018
Satya Nadella by n.bhupinder on 2014-07-10 23:09:07

Microsoft CEO Satya Nadella said that the company will earn $20 billion per year from its cloud services business by 2018. Nadella has convinced Wall Street that the transformation to a “mobile-first, cloud first” world will be a positive for the Microsoft regardless of the challenges.

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In a transition phase

Nadella expects that by 2018, the corporate cloud business of Microsoft will be on a $20 billion annual run rate, an increase from $6.3 billion today, says a report from Recode.

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Just a few years back, Microsoft’s core business was shipping software that consumers and businesses purchased every few years. However, in the current scenario, the company sells subscriptions, earns revenue from the search and also builds some of its own hardware.

“This is not a one-for-one shift,” Nadella said at a meeting with financial analysts on Wednesday. “There is actually a pretty significant expansion of the value we can deliver.”

Microsoft making efforts to strengthen Windows eco-system

At present, the PC market is running in a downward trend, and in addition, the company is facing significant challenges in the mobile space, where its Windows operating system is far behind the likes of Apple and Google.

However, Microsoft is making efforts to overcome these challenges. Recently, the firm announced plans to help iOS and Android developers bring their code to Windows 10, adding carrier billing for Windows app purchases along with the introduction of its new augmented reality system HoloLens.

The company is working on its Windows 10 goal of targeting billion devices within two to three years of the operating system’s release this summer. Nadella said the plan is to attain that lofty number by the end of fiscal 2018. Nadella noted that more devices will attract more developers to the platform, strengthening the entire Windows ecosystem.

The long-awaited move from Microsoft to fully embrace the cloud is now underway, and the company has conveyed to investors the extent and speed at which it will grow. Microsoft has set a challenge for itself, and we will soon know if either the cloud was over-hyped or if Microsoft’s strategy will enable it to rise the rising wave of cloud services.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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