Why the Microsoft Azure Cloud “very profitable” over the Amazon
When Microsoft announced earnings last week, one beat, he proudly showed a growth of 127% of its huge huge cloud business importance, the head to head competition with Amazon Web Services cloud Juggernaut.
But was buried in this growth, a detail that Wall Street did not like much, sent the wobbling. It is now about 8% since the publication of the results.
The problem is that Microsoft should cover gross margin over the rest of the fiscal year declined (two semesters), said management.
Karl Keirstead German Bank in a research note on Thursday, “Azure grows extremely profitable growth compared to operating margins of 29% in 4Q15 from AWS published.”
So German bank with Microsoft taken to try to figure out why, and we were very satisfied with the result, Keirstead reiterated a “buy” rating and a target price of $ 65 which is pretty optimistic, because the stock is just over $ 50 and has never been as high as $ 65 (when adjusted for splits) been.
Microsoft has great discounts for corporate customers to offer try to convince the cloud, rather than the Amazon or other.
“MSFT evaluated aggressively adopting and MSFT probably looking Azure as a way to promote the business to secure and to help 365 migrations increase office. If this is a major reason for the decline of GM, we can live with it,” he wrote.
Meanwhile, Microsoft is growing rapidly overall benefits cost management.
Keirstead also notes that all other traditional software business cloud competitors do the same – face pressure on margins and all kinds of discounts offer to try customers to get their versions in the cloud test.
As we have with enterprise software company, reported that more complicated than just a little offer discounts cloud treat.
For Microsoft, the company has provided in Azure, for a type of business software agreement was executed known that the customer does not cost more money. This technique works, but it is somewhat risky. Some companies take discounts on other products, then ignore Azure.
As Microsoft have been under increasing pressure statistics on actual consumption cloud, not only to present the growth in sales under contract to give a clearer picture of all this.
In fact, the former CEO Steve Ballmer, now the largest shareholder of Microsoft, the company wants to make and report on the actual number of cloud sales. Microsoft sales “intelligent cloud” $ 6.3% in the last quarter, but the name of the device is a bit misleading. This equipment traditional Azure with Microsoft server software provides server data no clouds, such as Windows and SQL Server.
Disclosure: Jeff Bezos is an investor in Business Insider by the investment company Bezos Expeditions hispersonal.