How Much Will Microsoft’s Intelligent Cloud Revenues Grow In The Next 3 Years?

by Trefis Team
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Microsoft‘s (NASDAQ:MSFT) Intelligent Cloud division houses the company’s public, private, and hybrid server products and cloud services; Azure is Microsoft’s rapidly growing cloud services offering. In order to promote growth in Azure, Microsoft has shed its traditionally acrimonious stance towards open source and has joined the Open Innovation Network, a group of companies offering products on a royalty-free basis. The company’s moves are aimed at making a greater number of services and applications available through Azure, thereby aiding wider adoption. We expect the Intelligent Cloud division to grow to $42 billion in revenue by fiscal 2022 end, a CAGR of 7% from fiscal 2018 revenue of $32 billion.

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Microsoft has based its subscription offerings on the Azure cloud, giving the company unprecedented analytics capability. Not only does understanding relevant trends bode well for making incremental improvements to Microsoft’s applications, it also makes Azure a better platform overall, which in turn is likely to attract significant workloads. While AWS continues to lead the space, Amazon’s increasing business overlap with many of its customers has led some customers to evaluate other options, and Azure’s number two position gives Microsoft a slight edge over other competitors. Additionally, the increasing need for computing locally has been driving the adoption of edge computing. Furthermore, the need to marry legacy and distributed cloud environments has necessitated customers building out their cloud strategies with vendors who can support multiple business processes. Microsoft’s ecosystem of applications (including Office and Dynamics, among others) gives the company a competitive edge in such situations, helping growth.

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