Since last year Microsoft (MSFT, Financial) has invested a lot of time, effort, money and attention to Cloud. Finally the table has turned and company has started to experience the big numbers on the chart. What comes as a surprise for the company is that the small businesses are adapting to it more than the big ones. It might be a good sign for the company. New startups are the trend and money baggers of the market and if such startups are interested in Microsoft’s technology, then the company is certainly moving in the right direction.
The experience so far…
Satya Nadella, the Microsoft chief, had this vision a year back that Cloud computing holds the future of the company. Market has started to show the love back and in the last month the company has seen the share price go up by 10%. The cloud revenue has seen a jump of 106% and also the advertising revenue has jumped a loop of 21%. Even Google’s (GOOG, Financial) shares were up by 3%. All blue skies are for Cloud computing. Nadella’s vision and Microsoft’s execution have proven the point. At that time the vision might have seemed a bit myopic to many, but today the same myopic view seems to be the focus.
The key is small business
Every small business is same as the large business in operation. Their needs and demands are exactly the same; what varies is the scale. But some started asking why the numbers from a small business are coming now. The technology revolution in the small business has now started to enter and from what we perceived as the availability of such technological options for large ones, but now the small ones can afford it as well. The small business market is a big untapped area and introducing technology is a win-win situation for both. The stock rose around 9.6% in a quarter where they earned a lot, thanks to this situation even the prediction by Standard and Poor’s 500 Index was 1.3%.
Present growth is driven by young age drivers
The company owes the credit of this growth mostly to the small startup kind of businesses. The small companies are going for the option of getting access to softwares at the price of coffee at star bucks. The affordability and access to software they need is what’s exciting these businesses and encouraging them to step ahead for technology advancement.
Gates was quoted as saying that “they are selling more Cloud then on-prem.” They are in their fifth year where they are experiencing a triple-digit growth, thanks to their office 365 product, and it’s a growth driver for them.
Conclusion
Microsoft’s push to Cloud computing has paid off, accelerating under Nadella's able guidance. The third quarter paid off well in which the net income was $5.66 billion –Â that is 68 cent a share. For Microsoft this is its fastest-growing segment. If someone read in detail the last earning declaration of the company, the big driving factor of its growth was small business, and it even quoted the same back then, too, and how it has transformed its technology to reach a whole new segment now. And a mere boost to it has made good numbers for them on the chart. The untapped part of the market signifies growth potential for the company and also the same for the investors of the company. Microsoft is one of the stable players in the technology business, and its latest risk has started to prove itself and is growing fast.
