Depending on what you read, Microsoft could lead the industry in cloud revenue, or it could still be a long way behind Amazon’s AWS. Recently The Information looked at the numbers, noting that “Microsoft Cloud revenue,” which has hit $91 billion year-to-date in June, a number higher than Amazon’s $72 billion, could well be a bit misleading:
“(T)he ‘Microsoft Cloud Revenue’ number includes contributions from many different parts of Microsoft, from its Azure cloud services ‘Infrastructure’ unit to applications such as Office 365 and most of LinkedIn. Amazon Web Services, on the other hand, is mostly infrastructure – selling data storage and computing power – with few applications. Microsoft does not disclose Azure revenue. According to Gartner, AWS holds 39% of the global cloud infrastructure market against 21% for Microsoft.
While the casual observer might equate “Microsoft Cloud” with “Azure,” it’s not that simple. While investors and others might like to compare the “Cloud” from Microsoft (Azure) to AWS to Oracle to Google, obscuring the numbers seems to be more the focus of the companies themselves.
And it’s not just Microsoft; Google also groups applications that run on its cloud with its cloud numbers, much like Oracle until recently. And that’s another problem: Not only are companies getting creative with their reporting numbers, but they’ve been known to change the way they report those numbers over time, making it even more difficult to get a report. a clear picture.
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Oracle used to disclose cloud infrastructure numbers, changed that in 2017 to add online applications, and changed again last month. Microsoft last year changed its Azure growth rate figure to “Azure and other cloud services”, adding figures for the recently acquired artificial intelligence healthcare business, Nuance.
And yes, companies are making these changes to, well, make themselves better seen by investors:
The problem for investors is that in addition to core business productivity apps and Azure, Microsoft Cloud now also includes subscription revenue from Linkedin, which Microsoft acquired in 2016, as well as GitHub, which Microsoft acquired in 2016. it acquired in 2018, along with “other unspecified commercial clouds”. Properties.” Combined, this bolstered cloud business accounted for 45%, or $91 billion, of the company’s $198 billion in fiscal 2021 revenue. It grew 28% in the most recent quarter. The collective gross margin for this cloud is 69%, a significant step up from where Microsoft started when its definition of cloud revenue was narrower.
Microsoft makes billions of dollars per quarter from the cloud no matter how you slice it, but trying to compare Microsoft’s apples to Google’s or AWS’s oranges isn’t as simple as it sounds.