Microsoft’s core growth engine is Azure, one of the world’s largest cloud infrastructure platform. Second to only Amazon Web Services. However, Microsoft Azure’s margins are still expanding as it is growing at a faster rate than AWS. Microsoft’s quarter closed on September 30th, so the tech giant just announced its revenue rose 14% annually to $33.1 billion, topping estimates by $860 million and marking an acceleration from its 12% growth in the fourth quarter. Its EPS increased 21% to $1.38, beating expectations by 14 cents. Microsoft attributed most of that growth to its commercial cloud business, which grew its revenue 36% annually to $11.6 billion and accounted for 35% of its top line.

Microsoft still has not disclosed Azure’s exact revenue, but we know it lags behind AWS’s reported revenue of $26 billion. Azure continues to gain ground towards being the top cloud infrastructure platform for two main reasons: Microsoft bundles its services with its other market-leading software products (like Windows, Dynamics, and Office 365), and it attracts big enterprise customers which don’t want to feed Amazon’s most profitable business.

Azure’s core IaaS/Paas platform, which competes against AWS and other rivals, still generates lower margins than the add-on services it cross-sells to enterprise customers.

Azure AI,  the suite of AI tools for analytics, automation, and other services, is the biggest add-on service Microsoft has. Microsoft claims that Azure AI now serves over 20,000 customers, and that more than 85% of the Fortune 100 used the Azure AI tools over the past 12 months. Microsoft also has gotten a boost from another add-on service, Azure Sphere. Azure Sphere is a Linux-based OS that links Internet of Things (IoT) devices on the “edge” of traditional networks to Azure.

Azure remains the underdog in the cloud platform race, but Microsoft continues to show their dedication towards pushing them to the top. 2W Tech is a Microsoft Gold Partner and has been working with the Azure platform since its induction. We are also an Epicor Gold Partner and believe in the marriage of the two. Epicor in Azure is a great product for Manufacturers who want to take their business operations to the next level. Give us a call today to learn more.

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