While Microsoft is famous for its PC programs such as Windows and Office, these programs aren’t making as much profit as they used to. Microsoft’s investments in the smartphone business so far have also been disastrous.
Back in 2014, Microsoft bought Nokia’s mobile business for $9.4 billion. Microsoft had planned to combine Windows and smartphones but failed. Microsoft had to lay off thousands of employees and scrap its plan. On Tuesday, Microsoft reported a 71% decrease in revenue for its mobile business.
After Microsoft’s mishaps in the smartphone industry, Microsoft has to learn to transition. Microsoft’s plan to introduce Windows 10 platform on more than one billion of its devices has been pushed back due to Microsoft’s smartphone flop.
Microsoft, however, is determined to make a comeback with its new cloud business. Microsoft plans to replace Amazon as the lead company for cloud computing services. Cloud computing is the new trend that helps connect people online to software housed in big data centers.
On Tuesday, Microsoft reported its quarterly earnings. These earnings indicated that Microsoft’s cloud business was growing rapidly. Revenue from Azure, Microsoft’s cloud computing business, has increased by more than 100%.
Cloud computing was always one of Microsoft’s priorities. The reason why Microsoft didn’t take action earlier was due to the reluctance Microsoft’s previous chief executive Steven A. Ballmer. Microsoft’s present chief executive, Satya Nadella, had prioritized cloud computing since two years ago.
Microsoft has to keep in mind that the cloud computing business model is not made to reap exceptionally high profits. Renting software in the cloud is cheaper than selling licenses to consumers. Microsoft will have to accept that cloud computing has a more stable business model.