Azure was the key driver of revenue for Microsoft in the second quarter after jumping a whopping 62% from the previous 12-month period. Surpassing most projections by analysts, the company’s latest quarterly results show that its overall sales grew 14% over the same duration to hit $36.9 billion.
Azure’s putting a dent on AWS dominance
All the key players in the Infrastructure-as-a-Service (IaaS) market, from Microsoft and Amazon to Google, Salesforce, and Alibaba, are making substantial investments in their IaaS technologies as the cloud wars take shape. But if revenue growth is anything to go by, Azure’s latest sales figures show that Amazon Web Services (AWS) is gradually losing the advantage it has had for many years as an early market entrant.
Microsoft’s earnings report for the quarter shows that its server solutions and cloud services soared 30%, buoyed by Azure.
Our commercial cloud revenue, which includes Office 365 Commercial, Azure, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud properties, was $12.5 billion and $24.1 billion for the three and six months ended December 31, 2019, respectively.
How Microsoft might eventually win the cloud wars
Right now, AWS is still the dominant player in the cloud computing industry. According to this Statista chart, the service had a 39% global market share by the third quarter of 2019. Azure and Google Cloud commanded 19% and 9%, respectively.
But Microsoft has several advantages that it can exploit to the point of asserting dominance in the cloud services market or at least leveling the playing field. The software maker already got one over Amazon when it won the Joint Enterprise Defense Infrastructure (JEDI) contract last year, thanks to its superiority in hybrid cloud computing.
Clients like the U.S. Department of Defense will want to keep their most sensitive information on-premises or in a private cloud. They also need a level of scalability where some system resources or data are on a public cloud. That’s the hybrid computing infrastructure that Azure offered the DoD before winning the JEDI deal.
If Microsoft can keep offering a best-in-class hybrid cloud, it can expect more multimillion-dollar deals to go its way at the expense of Amazon.