
Microsoft Beats Amazon in 12-Month Cloud Revenue - darylyu
https://www.forbes.com/sites/bobevans1/2018/10/29/1-microsoft-beats-amazon-in-12-month-cloud-revenue-26-7-billion-to-23-4-billion-ibm-third/
======
morsch
What I learned from this article: Microsoft not only considers their Office
subscriptions to be cloud revenue (I knew that already), but apparently
LinkedIn, as well.

------
ksec
We used to use the word Cloud as VM, or Hardware Infrastructure related only.
Now every online Services are "Cloud Revenue." Adobe should rename their
Subscription as "Cloud Revenue" as well. I am sure Wall Street like a new spin
on everything.

While for Amazon, how is Online Retailing not "Cloud Revenue", or pretty much
everything for Amazon should be Cloud Revenue.

~~~
segmondy
well, Amazon gets to charge for hosted database, cache, queues etc. So I cans
see why Microsoft will decide to claim hosted software as well. The real
reason tho is more that Wall Street has no idea and it looks like they have
grown really fast, caught up and passed AWS.

------
manyhats
Suggest that readers look at cloud revenue from a business model perspective,
not a technology one.

Cloud revenues between Amazon and MS are comparable from an investment point-
of-view:

\- sticky (unless something bad happens, if you're a paying customer in month
1, you're probably still a paying customer in month 2)

\- service delivered "in the cloud" (neither vendor needs a local brick/mortar
storefront)

\- fixed cost: data centers, variable cost: "things" in data centers

\- for enterprise accounts: high-touch salesforce and dedicated contacts

\- for end-user / SMB accounts: primarily self-service via online tools

Yes, one of them gets more revenue from IaaS and the other from SaaS. Each of
these, and the specific submarkets that the two of them play in, will have
different growth rates and potential and affect their respective valuation.

Still, from an investment standpoint, based on the above characteristics, I'd
feel reasonably good about comparing the two of them on financial and
valuation metrics for the "cloud" parts of their respective businesses.

~~~
timsneath
This an insightful post -- but I think there's one key characteristic missing
that Wall Street cares about still more, and that's growth.

Traditional products like Office 365 may be sold as a subscription, but the
market is largely saturated. Its growth is primarily dependent on productivity
device growth. "True" cloud products, whether serverless or lift and shift of
existing workloads, have much higher growth potential since a large percentage
of the attachable market is still unreached.

That's why it's a little disingenuous for Microsoft to claim products like
Office 365 and Dynamics 365 as cloud revenue. For many years before the cloud
was a thing, they earned that revenue in the form of Enterprise Agreements:
which are essentially three-year subscriptions for the same products.

------
Upvoter33
I think the bigger question is: when new services are developed, which
platform to people develop on?

Microsoft is going all out to sound like they are winning in this battle, but
this is just PR. That said, perhaps PR will be a winning strategy...

------
tracer4201
Microsoft may have better products or cloud services, but I’m not sure what’s
the takeaway here. $23 vs $26.7 billion... okay, interesting... now tell us
what share Amazon has vs Microsoft. Is the difference enough that Microsoft is
a little bit behind or at this difference rate, would it still take Microsoft
3 years or 10 years to catch up? Maybe help understand what’s driving that.

Author also wrote this article, which if you look at his list of insights on
why Microsoft is positioned better, has no substance. It reads more like an
ad.

[https://www.forbes.com/sites/bobevans1/2018/07/26/why-
amazon...](https://www.forbes.com/sites/bobevans1/2018/07/26/why-amazon-cant-
match-microsoft-in-the-cloud-10-insights-from-satya-nadella/#7e80d8c31fb8)

Clickbait without substance.

------
honopu
That’s pretty interesting. One thing to keep in mind when thinking about aws
cloud revenue, they bill internal teams for cloud revenue. I don’t know how
much of aws revenue comes from internal teams, but at least part of it is
essentially moving money around.

~~~
Jyaif
By that measure, FB is one of the biggest cloud provider in the world. That
would be incredibly misleading. Do you have a source?

~~~
honopu
Straight from someone on a team there. Sorry I can’t be more specific.

------
ttty
> Amazon is the only one of the three companies that breaks out its cloud
> division in terms of sales. The company said on Thursday that AWS revenue
> jumped 49 percent to $5.44 billionin the first quarter.

> Microsoft said Azure revenue jumped 93 percent. KeyBanc analysts estimated
> Azure had $1.76 billion in revenue, while Raymond James analysts predicted
> the number was $2.05 billion.

This is a cloud hosting comparison. In the article they are comparing apples
to oranges...

------
commoner
Posted 19 days ago:
[https://news.ycombinator.com/item?id=18383553](https://news.ycombinator.com/item?id=18383553)

------
RickJWagner
I've been surprised and impressed by Microsoft's charge into the cloud. I
really wouldn't have guessed (a short while ago) they could challenge Amazon.
Kudos to them.

------
nixgeek
Incredible results, congratulations to Microsoft. What’s the combined annual
run rate for the Top 5 providers now and is there a sensible breakdown in
IaaS, PaaS and SaaS or is it predominantly combined reporting?

