> Phones and cloud services aren't in competition, they're complimentary services -- phones create demand for cloud services.
Sure, from the standpoint that devices create demand for computing services, which these days are delivered via the cloud. But there's a lot less of an inherent advantage that Microsoft has in that environment.
On top of that, the money to be made is a lot lower. Let's throw out a scenario here - Microsoft trades its OS dominance for a dominance in cloud computing. They lose all of their OS revenue (unlikely to happen) in exchange for having a huge chunk of the cloud computing market (also unlikely to happen).
If we model this out - Amazon AWS in 2015 will make roughly $6b in revenue, which is about 10% of the total public cloud market in 2015 according to IDC In 2018, this market is supposed to be 128b. Let's say that Microsoft in 2018 has 2x Amazon's current market share, which would be a huge success by any measure, that gives them ~$24b in revenue.
Which is half of what they made in business software licensing in 2014. Half. They made 40 billion just on the business licensing end of their traditional software business.
I fully believe Microsoft will continue to live and innovate and potentially succeed in this brave new world, but it will do so at a huge long-term impact to its revenue and size.
Sure, from the standpoint that devices create demand for computing services, which these days are delivered via the cloud. But there's a lot less of an inherent advantage that Microsoft has in that environment.
On top of that, the money to be made is a lot lower. Let's throw out a scenario here - Microsoft trades its OS dominance for a dominance in cloud computing. They lose all of their OS revenue (unlikely to happen) in exchange for having a huge chunk of the cloud computing market (also unlikely to happen).
If we model this out - Amazon AWS in 2015 will make roughly $6b in revenue, which is about 10% of the total public cloud market in 2015 according to IDC In 2018, this market is supposed to be 128b. Let's say that Microsoft in 2018 has 2x Amazon's current market share, which would be a huge success by any measure, that gives them ~$24b in revenue.
Which is half of what they made in business software licensing in 2014. Half. They made 40 billion just on the business licensing end of their traditional software business.
I fully believe Microsoft will continue to live and innovate and potentially succeed in this brave new world, but it will do so at a huge long-term impact to its revenue and size.