Ford has announced that it will partner with Microsoft Azure to automate updates to automobile software such as its Sync 3 infotainment system as well as functionality that enables owners to check battery levels and remotely start, lock, unlock or locate their vehicles. As a result of the partnership with Azure, Ford vehicle owners with Sync entertainment and navigation systems will no longer need to take their cars to the dealership for periodic software upgrades, but can instead leverage the car’s ability to connect to a wireless network to download enhancements to Sync. The Azure-based Ford Service Delivery Network will launch this summer at no extra cost to end users. Use cases enabled by the partnership between Azure and Ford are illustrated below:
Despite Ford’s readiness to use long-time technology partner Microsoft for the purpose of leveraging a public cloud, the Dearborn-based automobile giant prefers to use on-premise infrastructures for more sensitive data such as odometer readings, engine-related system data and performance metrics that reveal details about the operation of the vehicle. Moreover, part of the reason Ford chose Microsoft was because of its willingness to support a hybrid cloud infrastructure marked by an integration between an on premise data center environment and a public cloud such as Azure. As reported in InformationWeek, Microsoft will also help Ford with the processing and analysis of data given the massive amounts of data that stand to be collected for its fleet of electric and non-electric vehicles. Ford’s Fusion electric vehicle, for example, creates 25 GB of data per hour and subsequently requires the application of pre-processing and filtering procedures to reduce the amount of data to a point that renders its aggregation manageable for reporting and analytics purposes. Ford’s larger decision to partner with Azure represents a growing industry trend within the automobile industry to use cloud-based technology to push software updates to vehicles and gather data for compliance and product development reasons that includes the likes of Hyundai and Tesla. The key challenge for Ford, and the automobile industry at large, of course, will hinge on its ability to acquire internet of things-related automobile data and subsequently perform real-time analytics to reduce recalls, fatalities and facilitate more profound enhancements in engineering-related research and development. Details of which Ford vehicles stand to benefit from Azure-powered software delivery this summer have yet to be disclosed.
Microsoft Corporation recently announced revenue of $26.5B for the quarter ending December 31, 2014. Devices and Consumer revenue constituted $12.9B while Commercial revenue, spanning cloud revenues, server products and Windows licensing grew 5% to $13.3B. Of the $26.5B in quarterly revenue, commercial cloud revenue grew to an annualized revenue run rate of $5.5B driven largely by sales of the cloud-based Office 365 product, Azure and Dynamics CRM Online. Office 365 subscribers increased to 9.2 million, search-based advertising revenue grew 23% and sales of Xbox consoles and phone-based Lumia units reached 6.6M and 10.5M respectively. Microsoft’s commercial cloud revenue projections of $5.5B indicate that its cloud revenues are increasingly competitive with Amazon, which reported revenue of $5.6B in the “Other” category for the most recent fiscal year, the vast majority of which belongs to Amazon Web Services.
Two months after Microsoft Azure (Azure) introduced Live Streaming functionality to Azure Media Services, Azure announced the addition of PlayReady encryption technology to protect live streaming and video-on-demand content. The availability of Microsoft PlayReady for Azure’s Live Streaming product allows Azure customers to deliver enterprise-grade encryption technology to the “same Live Streaming solution that seamlessly delivered the 2014 Winter Olympics and 2014 FIFA World Cup.” Microsoft PlayReady complements its AES dynamic encryption for live streaming by delivering encryption that supports a variety of devices including set-top boxes such as Apple TV, Roku and Google Chromecast, mobile devices and PCs. Azure Media Service customers can differentially combine PlayReady encryption and AES dynamic encryption streaming protocols such as Http-live-streaming (HLS), Smooth Streaming and MPEG-DASH. Moreover, PlayReady’s technology enables customers to set restrictions around the time period within which the content can be viewed. In all, the availability of PlayReady encryption technology for live streams and video on demand content on the Azure Media Services platform gives Azure yet another feather in its cap as the battle for product differentiation between and amongst major cloud players such as Amazon Web Services, Azure and Google evolves. Microsoft PlayReady for Live Streaming protects customers against content piracy and strongly positions Azure Media Services to add to an impressive roster of customers that already includes NBC Sports, BlinkBox and Tesco.
Microsoft recently announced support for Docker and Kubernetes technology on the Azure platform. Docker is an open source technology that enables developers to “build, ship, and run distributed applications” by means of container technology that facilitates application migration and deployment. Meanwhile, Kubernetes is an open source cluster management platform that can be used to deploy Docker containers. Azure customers can now use the Kubernetes platform to create and publish Docker containers to the Azure storage platform. In addition, Azure customers can deploy and configure Azure clusters using container images from Azure Storage or the Docker Hub. The Microsoft Azure team also built the Azure Kubernetes Visualizer which provides developers with a visual representation of the status of Kubernetes when managing Docker technology as illustrated below:
The Azure Kubernetes Visualizer is intended to “visually demonstrate some Docker and Kubernetes concepts such as containers, pods, labels, minions, and replication controllers.” Given that Kubernetes was open-sourced by Google in June, Microsoft’s decision to support Kubernetes and Docker represents a stunning example of the way in which container technology promises to drive product development as it relates to Infrastructure as a Service cloud computing. Amazon Web Services, for example, has yet to embrace Docker technology, and given its history of ignoring open source projects with the exception of Apache Hadoop, is likely to continue to withholding support for Docker. Meanwhile, Microsoft’s decision to support Kubernetes in conjunction with Google and its IaaS Google Compute Engine opens the door for the possibility of increased inter-operability between Azure and GCE, and subsequently promises to assert the criticality of Docker and Kubernetes to conversations about cloud computing inter-operability. The real winner from Azure’s support for Kubernetes and Docker, however, is Docker, whose container technology is likely to continue skyrocketing in adoption and affecting market dynamics not only within the IaaS space, but also the Platform as a Service (PaaS) landscape given its ability to reduce the gap between application development and operations by streamlining application migration across different cloud environments.
Microsoft has restored one of the most severe outages on the Microsoft Azure platform of 2014 after “Virtual Machines, Cloud Services, Websites, Service Bus, HDInsight. Mobile Services, Backup, Site Recovery, StorSimple” and “Automation, Backup, Site Recovery” experienced full service interruptions in multiple regions. According to Reuters, the outage affected Azure services in the “US, Europe, Japan, Brazil, and the Asia Pacific region.” Azure’s recent problems began on August 14 with full service interruptions to Visual Studio Online, followed by disruptions to the ability of select users to log-in to the Azure management portal, impairments of its auto-scaling functionality and network interruptions in the Japan East region. As of the evening of August 18, “Azure core platform components are working properly” and “all the popular services are working properly” as reported on its Azure status web page. Thus far, Microsoft has offered no explanation of the outages though analysts and commentators are likely to await the release of a detailed post-mortem with baited breath given that Azure constitutes a key component of CEO Satya Nadella’s vision for the renovation and restoration of Microsoft. That the outage affected multiple regions suggests that the technical failure was systemic and significant in scope and as such, Microsoft will need to elaborate in ways that assure customers similar such outages do not recur.
On Tuesday, Microsoft released its Q4 2014 earnings report, the second such report since Satya Nadella took over as CEO in February. Key features of the report include the following:
•Revenue for the quarter ending June 30, 2014 amounted to $23.38B, up 18% year over year from $19.89B.
•Net income was $4.61B, down from $4.97B for the same quarter during the preceding year.
•Earnings per share calculated to $0.55/share or $0.05/share below the $0.60/share earnings target anticipated by Wall Street. For the same quarter in 2013, Microsoft posted earnings of $0.59/share.
•Commercial cloud revenue grew 147% to an annualized run-rate of over $4.4B. Over the course of the quarter, cloud revenue grew $564M, largely due to triple digit growth in enterprise sales of Office 365 and Azure.
•Windows licensing revenue grew 11% to $13.48B.
•Office 365 subscribers grew to 5.6 million and added a million users this quarter.
•Bing advertising revenue grew 40% and now consumes 19.2% of the U.S. search engine market.
•Revenue from server products grew 16%, including Azure, SQL Server and System Center.
Despite missing its earnings per share target, cloud revenue represents the shining star in this quarter’s earnings report as Microsoft pivots toward Nadella’s “mobile first and cloud first” strategy and away from a business model based on PCs. Nadella himself commented on the Q4 2014 earnings results by highlighting the figures related to cloud revenue as follows:
We are galvanized around our core as a productivity and platform company for the mobile-first and cloud-first world, and we are driving growth with disciplined decisions, bold innovation, and focused execution. I’m proud that our aggressive move to the cloud is paying off – our commercial cloud revenue doubled again this year to a $4.4 billion annual run rate.
The bottom line here is that Microsoft’s aggressive move to focus on Azure and a cloud-based version of Office 365 has paid dividends in an impressively short period of time. Investors can feel confident in the cloud-component of Microsoft’s new strategy, although they are likely to feel less certain about its ability to deliver with respect to mobile devices and applications, particularly given the challenges specific to the $7.2B Nokia acquisition, which itself claims responsibility for 12,500 of the 18,000 employees that are slated to be laid off by the Redmond, WA tech behemoth. That said, 147% growth in its cloud business bodes well for the Azure platform, particularly given that it is fueled in part by Microsoft’s booming Office 365 cloud-based subscription offering, which operates on Azure infrastructure. Expect growth in Microsoft’s cloud revenue to continue although the company will wrestle with the $1.1 to $1.6 billion cost of integrating Nokia Devices and Services (NDS) through fiscal year 2015, and the first half of the 2015 fiscal year in particular.
Microsoft recently announced details of Azure ML, a platform for machine learning hosted on the Microsoft Azure cloud. Azure ML enables organizations to rapidly predict future trends such as crime, disease outbreaks, weather and traffic patterns. Whereas machine-learning and predictive analytics currently tend to be managed through on premise installations, Azure ML accelerates the pace with which data teams can obtain insights derived from historical data by making available a fully managed, scalable platform for machine learning that allows customers to focus on developing and refining predictive analytic parameters and algorithms without the burden of provisioning, managing and optimizing the infrastructure on which the applications are hosted. Azure ML will come pre-configured with “visual workflows and startup templates” that accelerate the process of developing predictive analytics. Moreover, the Azure ML platform will allow customers to expeditiously publish web services and APIs to facilitate collaboration between geographically dispersed teams. Currently, MAX451 is using a preview version of Azure ML to determine what retail customers are likely to purchase next while Carnegie Mellon is using the platform to understand variations in energy output across buildings on its university campus. Azure ML will be released in a public preview mode in July.