The reason why the likes of Google (GOOG, Financial) and Apple (AAPL, Financial) lead the way in mobile applications is because they have a slew of talented mobile developers plus a robust development infrastructure. Perhaps, Microsoft (MSFT, Financial) has realized this fact and more than just realizing, the company is now attempting hard to improve on its developer base. In its latest effort to grow its developer base and support rival platforms, Microsoft is open-sourcing the server stack for its.NET software framework (underpins many Windows apps), and allowing developers to write server/cloud-based .NET apps for Linux and Mac OS. The move could help .NET better compete against alternatives such as Ruby on Rails and PHP.
Pushing hard to become a mobile ecosystem player
Well, in addition to providing an improved development infrastructure to developers, the Redmond giant is also taking steps to widen the reach of its apps. As per a news report, Microsoft recently made its MSN consumer apps (previously known as Bing apps) available on the iOS App store, Google Play and Amazon’s (AMZN, Financial) Appstore for Android. This is an extremely healthy development considering the fact that most of these apps were made only for Windows platform. As a matter of fact, this initiative by Microsoft aligns perfectly with its vision to become an established player in mobile apps ecosystem. As is visible, the current management of Microsoft and especially, Satya Nadella is focusing highly on streamlining and improving company’s current product portfolio rather than spending resources to catch up with trends.
Perhaps this focus on mobile explains the recent acquisition of HockeyApp by Microsoft for an undisclosed amount. Basically, HockeyApp provides a beta distribution platform, live crash reports, user feedback tools and testing analysis for applications and has been expanding over the years in partnership with Windows and Android. The intent behind acquiring HockeyApp is to utilize and integrate its services in the company’s Visual Studio offering and thereby, improve their reach on iOS and Android devices.
To be honest, Nadella’s mobile first cloud first vision is a hallmark of innovation and strong foresight. Now, in order to achieve that the CEO is working towards implementing various structural and business changes that will achieve streamlined operations. As we are aware, Microsoft’s cloud segment has exceeded expectations in the last few quarters and that has instilled the confidence of investors in Nadella’s vision.
Powering the Cloud
Though Microsoft’s Cloud service Azure has been a bit bumpy for customers, a good number of customers still believe that Azure offers superior tools and service to Amazon’sweb service, AWS. In fact, in my first article on Gurufocus, I discussed the considerable threat to AWS from Azure, in detail. Building upon it, let me mention that Microsoft’s focus for now is to expand the presence of Azure platform and while it has a robust set of programming tools already present on the .NET framework, the company is still focused big time on quality.
Currently, Microsoft is pursuing small businesses i.e young web companies with promotional offers and new customer discounts. This is a shrewd marketing strategy considering the fact that this segment contributes hugely to Amazon’s cloud revenue. Though some of the quickly growing web companies like Airbnb, Spotify and Pinterest are still with Amazon, I am bullish on the fact that Microsoft is making a dent in Amazon’s stronghold and in spite of being late to the party (precisely, four years), it is closing the gap between Azure and AWS, faster than expected.
Mr Scott Guthrie who took over as the head of Microsoft’s cloud business after Nadella was elevated to the CEO position is working hard to reach out to the wider community of developers across the globe. As I mentioned, Azure has been trying to take market share from Amazon’s web services by offering affordable services and tools that align with the needs of small enterprises. Cloud business has growth at triple digits within Microsoft even as the giant has struggled to maintain growth in other segments thereby making it a sustainable growth-achiever.
Takeaway
In the past twelve months, the shares of Microsoft have escalated around 27 percent owing to strong performance of the company across most of its divisions. Nadella’s vision to empower company’s cloud offerings and tying its products with cloud is something that will become the high-growth generator for the company in future. The company has been successful in executing a healthy turnaround under Nadella and it should continue to do so considering the validity of the CEO’s vision.
