As technologies continue to integrate into our daily lives and, as big technologies become more competitive, it is important to pay attention to key factors that will stimulate growth in the industry. Artificial Intelligence and Cloud are two great market opportunities as well as strategic alliances both inside and outside the industry. MSFT has a strong exposure to each of these three growth factors. Demand for a cloud that is constantly evolving will be a huge game as Microsoft continues to fight for market share. Artificial Intelligence and all the applications it carries in the healthcare industry and other spaces will be another great engine of growth. Finally, the company builds partnerships and collaboration between companies as they continue to manage their economies of scale.
MSFT: Locating Industry Through Partnerships
MSFT has managed to create a niche for itself in this $ 5T software and services industry. They work through three key business segments, productivity and business processes, a smart cloud and more personal computers. Their business ecosystems are quite complex and continue to grow through acquisitions and partnerships
Only last month MSFT has made several deals to improve its position in the industry. On February 4, they bought the DataSense platform. On January 15, they signed a seven-year deal with Walgreens to provide digital health opportunities. On Jan. 7 it was announced that they had collaborated with Kroger to work on data related to repositories. They found a joint engineering office with Walmart in early November. Finally, they bought GitHub Inc in a $ 7.5 billion acquisition in October.
The company prepares for growth and uses every opportunity when it comes. Satya Nadela has been a key success factor for the company over the past few years. After becoming Chief Executive Officer in 2014, the stock price increased by
228% more profits than Apple and S & P 500. Overall, the company's management is heavily driven by a diverse board of directors who have only two external directors. They achieved the best possible score on three of the QualityScore columns, with a good track record in audits, boards and shareholder rights.
In search of opportunities: Growth in artificial technology
People are afraid of the capture of machine intelligence. More than a third of respondents in a survey published by the AI Management Center believe that the intelligence of high-tech machines will have a "bad" effect on humanity. Over 80% of respondents believe that robots and artificial intelligence require careful management. And almost a third believe that high-level machine intelligence should not develop at all, and a third is completely neutral to them.
Despite the uncertainty, MSFT is the company that people most trust in the development of artificial intelligence. The fact that users most trust MSFT to do this is extremely promising, especially considering that AI is a key factor for growth in the industry.
Microsoft also implements artificial healthcare technologies highlighted by their recent partnership with the Walgreens Boot Alliance.
Artificial Intelligence poses a significant risk, and companies in the software development process have made sure that consumers are aware of the risks , but Microsoft is working to "democratize AI" with aggressive investment everywhere
Artificial Intelligence as a Market is Expected to Examine 62.9% CAGR from 2016 to 2022, rising from $ 8B in revenue to nearly $ 50B by 2020. Microsoft will also implement its Azure API to share cloud health data.The cloud has become a major focus for many of the leading companies, with Amazon headed by Google and Google (NASDAQ: GOOGL) spends $ 25.5b in 2018 to try to gain market share.
Cloud: Clear Skies Ahead
Amazon is the dominant player in this space with its products, Amazon Web Services. They dominate each region, and although 76% growth in MSFT Azure's sales rose for the last quarter, dominance does not disappear soon. ” width=”640″ height=”320″ data-width=”640″ data-height=”320″ data-og-image-twitter_small_card=”true” data-og-image-twitter_large_card=”true” data-og-image-twitter_image_post=”true” data-og-image-msn=”true” data-og-image-facebook=”true” data-og-image-google_news=”true” data-og-image-google_plus=”true” data-og-image-linkdin=”true”/>
Source: SRG Research
Microsoft is close behind, as evidenced by their second ranking in most geographic areas. MSFT runs at Enterprise SaaS, and also has Amazon's foot in a private cloud. But this segment of the industry is highly competitive.
Source: Market Realist
The cloud itself is set for enormous growth. Over the past three years, revenue from IaaS + SaaS increased by $ 80b. These are variations of cloud platforms, with IaaS being a more user-friendly and SaaS
fully being run by an outside company.
Over the next five years, revenue of $ 300B is expected to increase. for IaaS + SaaS, which represents a growth of $ 60B per year compared to a five-year average annual growth of $ 26.7B. Market penetration for the $ 1.8T
market is expected to grow to 24% in coming years, compared with 7% penetration in 2018
MSFT is expected to have a 70x growth in revenue from their Azure platform relative to growth AMZN & S 11x of their AWS platform
. AWS takes precedence over Azure because they were the first to be launched in 2006. The company needed ten years from 2006 to 2016 to make the first $ 10B product revenue but only two years to add the next $ 10B, Now they are expected to make $ 10B in 2019 only .
Microsoft works on the same trajectory, but Amazon has a two-year start. After 2020, the MSFT should see the quick profits their biggest competitor has experienced. They will still lag, but the impulse will be on their side, with the projections being to add $ 10B to revenue in 2021E.
the amount of money they make from their products. AWS has had a 46.94% revenue growth compared to the previous year from FY17 to FY18, which is a contraction from previous growth figures. Performing the same MSFT analysis results in an increase of 17.6% on an annual basis, which is much less than the Amazon growth indicator. AWS also grew in the quarter by rising 45.3% in revenue from Q318 to Q418 vs. 20.5% growth in MSFT over a similar period of time.
Revenue from Amazon:
Source: Capital IQ some advantages over competitors, especially in terms of pricing. They lead through on-demand pricing options. AWS is usually not the cheapest option, but they offer more services than their counterparts. The Google Cloud product line is the most expensive
Microsoft also has a greater reach than its cloud competitors located in 54 regions around the world. They also have 120 + new subscribers to their product every month. It has the industry's highest compliance, which is important for longevity in the corporate world.
MSFT Growth Growth in Most of Key Areas and Most of the Key Growth Opportunities for Industry. Azure will be a huge opportunity for them, as well as games and hardware suggestions. They missed the revenue for Personal Computing in the last quarter, as the company said as a supply chain failure as a reason for that. However, their Intelligent Cloud segment increased expectations by 10.7%. ” width=”640″ height=”543″ data-width=”640″ data-height=”543″ data-og-image-twitter_small_card=”true” data-og-image-twitter_large_card=”true” data-og-image-twitter_image_post=”true” data-og-image-msn=”true” data-og-image-facebook=”true” data-og-image-google_news=”true” data-og-image-google_plus=”true” data-og-image-linkdin=”true”/>
Office 365 Commercial was also a strong growth segment for the company, with the subscription base rising by 2.5% from Q1. They have had problems with Office consumer products and will have to consider how to deal with competition in this space. Okta, which is an integration network for various cloud platforms, has seen a very large increase in the popularity of Microsoft Office 365.
19659062] Source: Okta
its biggest quarter so far, with $ 1.86 billion in revenue for Q219, 39% more than a year. The Chief Financial Officer expects revenue growth of 20% over the next quarter. There are several new devices in the product line, with the whisper of a product called "Andromeda," a "foldable, double screen" that may be Microsoft's next attempt to penetrate the smartphone market.
Source Survey: Geek Wire
AMZN Walking Tour: Compare Partners
Their Product differentiation and their geographical coverage. The company receives equal revenue sources from the productivity and business segments, intelligent cloud, and more personal calculations. The latter segment recorded the slowest growth compared to the previous year by 7.6%, but the other two segments were respectively 20.1% and 17.6%
Source: Capital IQ
For comparison, Amazon received approximately 50% of their sales from online stores, but they have had monumental growth in each of their respective categories. The growth rate of AWS, as discussed in this article, will be a constant indicator that the rest of the industry will try to meet. [Amazon10K
Amazon is much more dependent on US sales, with 68% of its revenue coming from indigenous sources. MSFT receives approximately 50.7% of US revenue and the other half from other countries. Amazon receives 20.6% of its revenue from Germany, the UK and Japan, and the rest of the world accounts for 10.5% of the revenue source.
Amazon surpassed Microsoft and the industry over the last three years. Microsoft moved in line with the S & P 500 Software Index, returning 111.8% to the 115.18%. This means that Microsoft has a place to close the gap and potentially reach a return of 215.79% on Amazon.