Microsoft believes in the Cloud.
Microsoft’s CEO Satya Nadella believes that the ‘Cloud’ service is the reason for his company’s recent success, as it published better-than-expected fourth quarter earnings reports on Thursday. "Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas," he said.
What he didn't mention was the role that one of the company's much older products played in the success of this new technology: Microsoft Exchange Server, which many of the world's largest companies rely on for email services.
When companies begin moving data to the cloud, typically a network of servers managed by an outside company, a common first step is to move email, often with other office software tools but sometimes on its own. For companies already relying on Microsoft Exchange and Outlook for sending and receiving email, information technology managers say, turning to the same company to handle that data in the cloud seems like a logical move.
The company announced Thursday that it was on track to generate $9.4 billion in annual cloud-based revenue, up from $5.5 billion a year ago.
Microsoft may be still far behind market leader Amazon, but it has become the fastest-growing major cloud provider. Its key Azure business has more than doubled year on year, well above the 65 percent growth rate of market leader Amazon.
Microsoft has worked hard to exploit the advantage its mail software provides. "Maybe one of the first steps is you want to move your email. That's fine," says Takeshi Numoto, corporate vice president for cloud and enterprise marketing. "That gets us more opportunity to engage with customers."
As cloud services rapidly expand, Microsoft will have to demonstrate that its products are equal to, or better than, those of its competitors in both quality and price.