Microsoft is betting that customers will embrace its cloud offerings, but executives on the Jan. 27 earnings call offered no timetable for that future ramp-up.
have adopted an "all in" strategy with regard to the cloud, but its Jan. 27
earnings call suggests the company-at least publicly-is playing a bit loose
with its roadmap for client adoption of the technology.
That could be
a reflection of some companies' reluctance to embrace the cloud, as opposed to an
on-premises platform, as the backbone of their IT infrastructure. But given the
"all in" nature of Microsoft's commitment, and the need for cloud-based
revenues to eventually replace those from its traditional desktop-based
software model, the question of how quickly companies will embrace its cloud
offerings is one of prime importance.
haven't given any guidance on the revenue of that and how fast it's going to
ramp up," Peter Klein, Microsoft's chief financial officer, told analysts and
media during the earnings call. "It's one of those things where it's going to
happen, and the exact sort of speed of the ramp is uncertain. I do believe that
once it starts to accelerate, it's going to accelerate pretty fast."
roughly in line with what Microsoft executives have been saying for months.
Klein also claimed that the "economics are very good" for companies that
complete the migration to the cloud.
even the stronger driver, especially now in the conversations, is the ability
to take advantage of the latest capabilities that we have," he added. "So it's
a very easy way to deploy the latest versions of our software, and
increasingly, that's really the biggest piece of the dialogue."
Microsoft's chief rivals in the cloud space, Salesforce.com, has touted its
offerings as the best way for businesses to stay current with their
applications' latest versions. "How many SAP customers are on the current version?"
Salesforce.com CEO Marc Benioff asked the audience during an Oct. 19, 2010,
keynote talk at the Gartner Symposium/ITxpo 2010. "How many Oracle customers ...
how many Microsoft? Fractions."
Microsoft's recent cloud effort has been focused on initiatives such as Office
365, whose subscription-based model-allowing organizations to stay up-to-date
with the latest versions of Microsoft Office, SharePoint Online, Exchange
Online and Lync Online-seems designed to counter that criticism. Microsoft launched
Office 365 in limited beta on Oct. 19, with general availability expected in
traditional lines of business generally performed well last quarter, according
to the company, with its Business Division's revenue growing 24 percent
year-over-year. Strong sales of Office 2010, Windows 7 and the Kinect
hands-free controller all helped contribute to $19.95 billion in revenues and
$6.63 billion in net income. That being said, the company has yet to see any
substantial profits for cloud initiatives such as Azure.
almost certainly has its own internal metrics for cloud adoption over the next
year or two, in the same way that it has undisclosed goals for the size of its
mobile-applications marketplace. However, those numbers are unlikely to leak
online anytime soon.
Server and Tools Business-in many ways the center of its cloud strategy-is
primed to undergo a shakeup this year with the departure of longtime division
President Bob Muglia. In a Jan. 10 e-mail to employees
, Microsoft CEO
Steve Ballmer claimed the division needed new leadership to "move forward into
the era of cloud computing."
"I had always
remarked to folks that Bob's a survivor. His time just finally ran out," the
anonymous head of the blog Mini-Microsoft, which frequently serves as a venting
place for Microsoft employees, wrote in a Jan. 27 posting discussing the earnings.
"It will be intriguing to see what leadership steps in or up and what happens
to Bob's current team. And who might be next. Bets?"