A lot of people we talk with who only follow consumer electronics news are always surprised to learn that Microsoft is still a gigantically profitable company. After all, they reckon, Windows 8 is hugely polarizing, Windows Phone is nowhere, the Surface is a money-losing flop and even the Xbox One has been running a distant second in console sales compared to Sony’s PlayStation 4. Given all these high-profile stumbles, it is fair to ask: Just why isn’t Microsoft falling apart at the seams?
The answer is that Microsoft has an enormous enterprise software and services business that is a well-oiled machine that rakes in revenues every quarter. The key to Microsoft’s enterprise prowess going forward is its huge cloud architecture, which represents the first half of new CEO Satya Nadella’s “mobile-first, cloud-first” strategy.
But what does such a strategy really entail? Writing over at TechPinions, Jan Dawson does a nice job of breaking down Microsoft’s strengths and weaknesses in this area. First, he shows that Microsoft has truly formidable strength when it comes to the cloud side of things.
“Microsoft is… a primary provider of cloud services, both for consumers and for enterprises, and that part of its business is expanding rapidly,” he writes. “The combination of consumer-facing cloud services such as Outlook.com, large-scale enterprise cloud infrastructure services such as Azure, and a shift to new, cloud-based business models such as Office 365 for consumers and business end users is a major strength for Microsoft.”
Things look much less rosy if we look at the mobile side of the equation, however. This is where Microsoft’s failure to make significant traction with Windows Phone or its Surface tablets has really come back to haunt it because the company has had to focus its efforts first on releasing tablet-centric versions of Office for Apple’s iPad and for Android tablets before releasing it onto its own platforms.
“The bigger challenge for Microsoft is, although it is increasingly strong on the cloud side, it remains weak on the mobile side, and will be trying to compete on platforms owned by its two major competitors,” writes Dawson. “I continue to be skeptical it can succeed in making money from its current set of products and services as long as they’re primarily running on Apple and Google’s platforms.”
Dawson’s full analysis is worth reading and can be found by clicking the source link below.