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Where will Microsoft be in 5 years? – The colorful fool



Microsoft (NASDAQ: MSFT) has been one of the best entrants in recent years, including 2019. This year, Microsoft's share rose nearly 30% on its heels Strong earnings report and guidance. For those who have not yet invested in Microsoft, you might think that you have failed. Although the stock has had a strong run and is currently trading at all-time highs if it continues to look – about five years – it is very likely that the stock of Microsoft will continue to be a strong performer.

Long connected by Microsoft with its Windows operating system and office software tools. While these products – especially Office 365 ̵

1; will continue to be a significant part of Microsoft's business, the main reason why Microsoft will do better in the future is the emergence of newer, faster-growing companies, especially the Azure Cloud, Microsoft's infrastructure-as-a-company. Service business.

Azure's strength is not only positive in and of itself, Azure even helps Microsoft increase sales of its other products. And so it goes.

  A hand holding a tablet with the animation of a cloud floating over it.

Cloud computing is the key to the future of Microsoft. Source: Getty Images.

Intelligent Cloud Outperforming Other Segments

Microsoft does not specifically disclose Azure's revenue and profit, but reveals Azure's growth rate, which was a whopping 73% in the last quarter – the highest of all Microsoft products.

Azure is part of Microsoft's intelligent cloud segment, which includes on-premise servers as well as software and business consulting services. The intelligent cloud business is currently the smallest segment of Microsoft. However, the intelligent cloud grew 22% in the last quarter, faster than anyone else. Based on the instructions from Microsoft, the intelligent cloud could possibly become the largest segment of Microsoft as early as the next quarter :

Microsoft Segment

3. Quarterly 2019 sales

3. Quarterly 2019 Growth Rate

] GY Q4 2019 Sales Orientation

Productivity and Business Processes

$ 10.24 billion

14%

$ 10.55 billion to $ 10.75 billion

9655015 $ 959505 $ 11.05 billion dollars

More Personal Computing

$ 10.68 billion

8%

$ 10.8 billion to $ 11.1 billion Dollar

Data Source: Microsoft Q3 Press Release and Conference Call.

Microsoft is currently the largest company in the world by market capitalization, but with the higher-growth cloud segment taking over Microsoft's largest segment, it should sustain the company's growth rate in the middle of the decade despite its already massive size ,

A Complete Offering Expands Markets [19659008] CEO Satya Nadella said at the recent Microsoft conference call that Azure is not only successful as an infrastructure service, but also opens up new markets and sells other products:

… if you Take a look at our cloud stack and find application in infrastructure, data and AI, productivity and collaboration, and business applications. That is unique again. So I think, what shows up in the order of magnitude as a differentiation in the competition, and you see that in our numbers. Above all, I believe that you see it in customer dynamics and what I believe is the customer's success. Today, digital technology is not about technology companies innovating. It's about the rest of the world innovating with technology, and Microsoft is uniquely capable of doing that.

Nadella says Microsoft can provide a one-stop-shop for all the requirements of a company's digital transformation – infrastructure, platform – and software-as-a-service – in addition to on-premise data center servers, this is a big competitive advantage. This has allowed Microsoft to better serve industries that have historically had limited market penetration, such as retail, healthcare, manufacturing and financial services.

Azure also fuels innovation

In addition, Microsoft is preparing the cloud for completely new products in future growth industries such as the Internet of Things and Edge Computing. A year ago, Microsoft said it would invest $ 5 billion in its IoT business over four years, and recently acquired IoT leader Express Logic.

Microsoft also manufactures existing platforms and software that are traditionally deployed on-premises to the Azure cloud, such as Cosmos Database and cloud-based versions of Office and Dynamics, as well as newer services such as LinkedIn, GitHub, Cybersecurity, etc. [19659025] How big will Azure be in 2024?

At the conference analyst Mark Murphy, management asked whether Azure Office 365 could outperform Commercial as Microsoft's largest product in a few years. Chief Financial Officer Amy Hood did not deny that claim, but also wanted to point out that other Microsoft software companies also have a bright future:

[i] That may well be, but I do not want that to actually diminish the facts There's a lot of room in our pro-seat companies, especially in LinkedIn's business applications, the Power Platform work we do. Satya mentioned security, identity and compliance. There is a lot of scope to increase value and growth in this area as well.

This is the big advantage for the big cloud infrastructure leaders. Not only is the cloud infrastructure growing at a rapid pace, but also the ability of every business to leverage other services from a single source for customers undergoing cloud migration is a great benefit. I would not be surprised if Microsoft, like the other major cloud providers, always outperforms the market over the next five years, even though the company exceeds $ 1 trillion in market capitalization.


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