Microsoft Makes Half of Its Money in the Cloud
This article is published in collaboration with Statista
by Florian Zandt
Even though Microsoft's best-known front-facing product might be its productivity suite Office 365, half of the revenue of its past quarter was created with cloud services and properties. Out of $52.9 billion made between January and April of 2023, cloud computing was responsible for $28.5 billion. This marks the first time that cloud solutions have had such a high share of the tech company's total revenue. Looking at Microsoft's last fiscal years, this development was to be expected, though.
As our chart based on company data shows, sales linked to cloud services and properties like Azure, Dynamics 365 and the commercial portions of LinkedIn and Office 365 amounted to 36 percent of the company's total revenue in 2020. In the period between July 2021 and June 2022, this share rose to 46 percent. While the increased tendency for companies to shift from on-premise to cloud solutions is one likely reason for this increase, the jump from 46 to 54 percent in the past quarter might also be explained by Microsoft's decision to intensify its partnership with and invest a further $13 billion into OpenAI in January.
The goal set by both companies is to gradually integrate the AI startup's large language model GPT-4 into every Microsoft product, with closed betas for the AI-powered versions of its search engine Bing and Office 365 either currently underway or concluding over the last months. Since this cooperation also entails hosting OpenAI's offerings on Azure cloud instances, Microsoft's cloud revenue is bound to become an even more important company pillar in the future.
According to estimates by Gartner, end users will spend approximately $592 billion on public cloud services in 2023. The biggest players in the market are Microsoft and Amazon with its Amazon Web Services product.
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