Microsoft Stock Reaches All Time Highs After Earnings Announcement Featuring 116% In YoY Azure Growth

Microsoft reported adjusted quarterly revenue of $22.33 billion and earnings per share of 76 cents, exceeding analyst expectations of 68 cents per share for $21.71 billion in revenue for the first quarter of the 2017 fiscal year, namely, the quarter ending September 30, 2016. The 76 cents earnings per share announcement amounts to $6 billion in non-GAAP net income for Microsoft, or an increase of 9 percent in comparison to the $5.4 billion in net income for the first quarter of the 2016 fiscal year. Meanwhile, Microsoft Azure experienced 116 percent in revenue growth with its intelligent cloud offering bringing in $6.38 billion in revenue for the most recent quarter. Moreover, Azure compute usage more than doubled based on a year over year comparison. Microsoft’s impressive earnings report led to stock gains that surpassed the high of $59.97 reached in 1999 with share prices surpassing $60 per share in after hours trading. Thursday’s earnings announcement underscores the importance of Azure as one of the key drivers of Microsoft’s growth and illustrates the vitality of Microsoft’s “cloud first” transformation under Satya Nadella. Microsoft has yet to grapple with the implications of the recently announced Amazon-VMware partnership although Nadella’s emphasis on the company’s commitment to machine learning and artificial intelligence throughout all of its offerings may offer a clue as to one of its prospective differentiators in the cloud computing space.

Guest Blog Post: “The Art of the Cloud Wars” By Scott Jeschonek, Director of Cloud Solutions, Avere Systems

Editorial note: This article was authored by Scott Jeschonek, Director of Cloud Solutions, Avere Systems. The opinions expressed below are those of the author, Scott Jeschonek.

Chinese military strategist Sun Tzu once wrote that battles are won or lost before they are ever fought, but can the same be said for the cloud wars? Though many industry thought leaders have made projections, the future of how the battle between public cloud providers will unfold remains hazy. Despite projections that global IT spending will fall in 2016, investment in public cloud services is expected to grow 16% this year, fueling the fire of the on-going war. Most industry experts would agree that AWS, Google Cloud Platform, Microsoft Azure and IBM Cloud Services are the key players to watch, however many CIOs still struggle with determining which cloud service provider is right for them.

The table stakes for becoming the top public cloud provider are only getting higher with each passing quarter, and at the same time, the rise of a multi-cloud strategy is shaking things up. So, how will the cloud wars play out and how can enterprises that want to embrace the cloud choose the right CSP (or combination of CSPs) for their organizations?

When the technical features of the four hottest CSPs put them on relatively even playing field, it is the brand personalities and customer experience that can help organizations evaluate which cloud provider is most suitable for their needs. Below is a breakdown of how each CSP’s culture and decades-long experience with their respective specialties has influenced their approach to building and selling cloud offerings.


Launched officially in 2006, AWS is the oldest among the major CSPs and draws strongly from its foundations as an online marketplace to provide ease-of-use and a seamless on-demand experience. In the cloud wars landscape, AWS is like the U.S. military of the public cloud – bigger than all the others combined. AWS is very streamlined in how it offers its products, how they can be purchased and how fulfillment is handled. AWS’s ability to provide a user-friendly e-commerce experience isn’t a surprise, because, after all, AWS is Amazon. Just like you can buy a book or a suitcase from, you can buy compute time or storage. AWS also boasts sophisticated large-scale data base products, APIs and control structures, including AWS Lambda, which lets customers run code without provisioning or managing servers. Given Amazon’s core value of customer service, the rapid growth of AWS and its ease of use make sense.

Google Cloud Platform

While Google’s cloud offering is newer on the scene, its recent enterprise investment makes it one to watch. The company’s history of being forward-thinking and cutting edge is carried throughout its cloud platform value prop. At its NEXT conference in March, Google focused its keynotes on the sophistication of its technology, and how savvy developers could take advantage of Google Cloud Platform’s dynamic point-to-point networking, artificial intelligence and machine learning offerings. Google arguably has the most sophisticated developer cloud on the market, which makes sense as one of the large-scale inventors of web scale, or scale-out computing.


IBM, which combined its July 2013 acquisition of SoftLayer Technologies with its IBM SmartCloud to form the IBM Cloud Services Division, is building on its historical strength as a provider of consulting and computer services. Professional services and consulting is not necessarily top of mind for AWS or GCP, so IBM’s global cloud platform appeals to those customers looking for a stronger engagement model. Professional services is part and parcel to IBM, and it can combine its cloud offerings and consulting capabilities with other technologies such as Watson.


Rounding out the four, Microsoft’s Azure has a strong and steady history in the CSP market. Though it offers many of the same features as the other three “big guns,” it has stood out by intelligently leveraging its long-standing strength in the enterprise and bridging its existing enterprise capabilities with its newer cloud offerings. Customers can run other Microsoft software offerings such as Exchange, SQL Server or Active Directory both in the cloud or on premises. Microsoft also offers licensing incentives for existing enterprises customers as an option to help them embrace Azure.

If your organization is, for example, a next-generation application outfit and has been in the cloud from the get-go, then AWS or GCP will suit you just fine. If you’re generating an Internet-of-Things-based application with a mobile front end, for instance, that will run on Android and iOS and you’re storing a lot of data, any one of the four will handle the job admirably.

But here’s where it gets a little tricky: if you’re an enterprise customer with your own (or leased) data center(s) and Microsoft applications and backoffice applications processing lots of data (a bank, for example), it’s a much bigger proposition to move to the public cloud. This type of customer is currently a challenge for all four of the major CSPs. For organizations with a more traditional IT infrastructure, it’s not a matter of simply copying and pasting their applications and technology into the cloud and calling it a day.

A Demilitarized Zone: The Rise of the Multi-cloud Strategy

Partly in response to these complexities, we’ve seen the rise of hybrid cloud and multi-cloud architectures and approaches. Multicloud, in particular, has been an unexpected twist in enterprise cloud adoption. CSPs catalyzed enterprise cloud adoption by driving prices lower and enhancing the sophistication of their offerings, yet now this very same competitive dynamic is allowing businesses to choose different clouds for different workloads based on the strength of each CSP.

There’s also the age-old concern about having a single supplier and being subject to vendor lock-in. By adopting a multi-cloud approach, enterprises can avoid the “data gravity” problem: as data accumulates there is a greater likelihood that more and more additional services and applications will be attracted to this data. By keeping data in different clouds, enterprises can avoid arduous and difficult data migration while taking advantage of differing pricing structures among the CSPs.

In the end, yes, we’re going to see an intensification of the cloud wars among the four big public cloud providers – Amazon, Google, IBM and Microsoft – and that’s a good thing for enterprises moving to the cloud. This competition is at once driving down prices, increasing buyer options and inspiring innovations in IT architecture that will ultimately lead to more freedom of choice and the ability to purpose-build cloud environments for enterprises who are looking to the cloud(s).

Microsoft’s Acquisition Of LinkedIn For $26.2B Marks Opportunity For Nadella To Demonstrate Microsoft’s Cloud-based Transformation

Microsoft announced that it will acquire professional networking giant LinkedIn for $26.2 billion in cash on Monday. The acquisition, the largest in Microsoft’s history, represents a landmark moment for Microsoft and the technology industry as a whole by underscoring Microsoft’s transition from devices qua PCs and operating systems to cloud-based software and infrastructures under current CEO Satya Nadella. As Nadella put things in an interview, the acquisition brings together the “professional cloud and professional network.” With over 400 million members, LinkedIn represents a treasure trove of data not only about professionals, but also about hiring trends and the global labor market more generally. Microsoft stands in a better position to monetize the surfeit of data that resides within LinkedIn that LinkedIn itself, but will need to demonstrate an ability to execute on a strategic plan for integrating and monetizing LinkedIn swiftly in order to appease investors eager to see value from the deal. As such, the deal represents a ripe opportunity for Nadella to showcase Microsoft’s renewed capabilities for innovation and operational agility while further demonstrating components of his “cloud-first” vision for the company. Microsoft’s acquisition of LinkedIn constitutes emphatic validation of the business model of SaaS social media companies and underscores the business value of data about collaboration. Microsoft’s task now will be to drive the development of synergies between its portfolio of products and services and LinkedIn and possibly even leverage LinkedIn’s core backend technology platform to build applications that richly deliver possibilities for collaboration and communication in an age where the frequency of device-enabled communication claims parity with face to face interaction between human beings.

Mesosphere Closes $73.5M In Series C Funding

On Thursday, Mesosphere announced the finalization of $73.5M in Series C funding led by strategic investor Hewlett Packard Enterprise with additional participation from Microsoft, a new strategic investor, in conjunction with previous investors Andreessen Horowitz, Fuel Capital, Khosla Ventures, and new investors A Capital and Triangle Peak Partners. Mesosphere’s Data Center Operating System (DCOS) helps companies manage hyper-scale data centers as if they were one unit in addition to facilitating the operationalization of distributed applications, containers, micro-services and Big Data within cloud-based and on-premise environments. The San Francisco-based startup boasts customers such as Microsoft, HP, Yelp and eBay and currently staffs approximately 125 employees. The funding raise will be used to enhance its engineering operations in addition to expanding its sales and support teams. Microsoft and HPE remain likely acquirers of Mesosphere, particularly given Mesosphere’s collaboration with Microsoft on the Azure Container Service and Mesosphere’s partnership with HPE to leverage HPE hardware. The biggest news from today’s funding announcement is Microsoft’s participation as a new strategic investor, which corroborates reports that Microsoft attempted to purchase Mesosphere last year for approximately $150M. The $73.5M in Series C funding round brings the total capital raised by Mesosphere to $126M. In addition to the funding raise, Mesosphere today announced the release of Marathon 1.0, an enterprise-grade orchestration platform and a new product, Velocity, a continuous improvement and continuous development tool for its DCOS that uses the open source Jenkins framework.

Microsoft’s Acquisition Of Metanautix Underscores Changing Face Of Enterprise Data Warehouse Analytics

In December, Microsoft acquired Metanautix, a Palo Alto startup founded by Google and Facebook veterans Theo Vassilakis and Toli Lerios that emerged from stealth with $7M in Series A funding in August 2014. Metanautix delivers a SQL interface for querying relational and non-relational datasets that dispenses with the need to integrate disparate data sources. Metanautix’s Quest platform brings the power of distributed computing alongside the simplicity of SQL to enable companies to concurrently ingest, analyze and visualize data from multiple datasets and data repositories. Metanautix’s platform shortens the time between data acquisition and data analysis by helping analysts understand the topography of the data within scope and subsequently enabling SQL queries to run against Hadoop, NoSQL and relational databases. The acquisition bolsters Microsoft’s portfolio of big data analytic tools and promises to fit into Microsoft’s SQL Server and Cortana Analytics Suite. Importantly, Microsoft’s acquisition of Metanautix illustrates the evolution of the concept of the traditional enterprise data warehouse given that platforms such as Metanautix empower customers to obtain 360 degree analytics by means of distributed, SQL-based queries, analytics and data visualizations, without the requirement to integrate and house all data within a single, unified warehouse or repository.

Microsoft Selects Red Hat As Preferred Vendor For Enterprise Linux Workloads On Microsoft Azure

Microsoft and Red Hat have reached a monumental agreement that enables hybrid cloud users to more easily deploy Red Hat solutions on the Microsoft Azure cloud.  As a result of the collaboration, Microsoft has designated Red Hat Enterprise Linux the preferred vendor for Linux workloads on Microsoft Azure. Enterprise customers who want to use RHEL on Azure can now do so with the blessing of Microsoft’s support for RHEL on the Azure platform. In other words, customers can now deploy RHEL on Azure in ways analogous to the deployment of RHEL on Amazon Web Services. To enable this partnership, Red Hat will designate Microsoft Azure one of Red Hat’s Certified Cloud and Service Providers in upcoming weeks and meanwhile, Microsoft Azure customers can leverage Red Hat’s application platform such as Red Hat JBoss Enterprise Application Platform, Gluster and Red Hat’s Platform as a Service, OpenShift.

The collaboration between Microsoft and Red Hat further includes enterprise-grade support for hybrid cloud environments marked by the participation of support personnel from both vendors to ensure that customers obtain the support they need. The partnership also features unified workload management within hybrid cloud infrastructures enabled by the integration of Red Hat CloudForms and Microsoft Azure and the ability of System Center Virtual Machine Manager to manage RHEL on Microsoft Azure. Moreover, the collaboration includes the ability to use .NET on Red Hat products and solutions in ways that expand the ability of developers to write .NET applications on Linux applications. Whereas previously developers often had to re-write .NET applications to use them on Linux, they can now use RHEL as the principal development platform for Linux.

All told, the agreement between Microsoft and Red Hat continues to illustrate Microsoft CEO Satya Nadella’s commitment to partnering with vendors in contrast to Microsoft’s historical stance of failing to integrate with vendors and potential competitors. More importantly, the announcement illustrates Microsoft’s commitment to supporting hybrid cloud environments and its willingness to support RHEL on Azure, not only at a technological level but also at the level of integrated enterprise-grade support. All this illustrates how Microsoft is putting its eggs in the cloud basket as it attempts to consolidate its relationships with enterprises and reputation for delivering enterprise-grade products and services in anticipation of an intensification of the battle for cloud market share with Amazon Web Services. Microsoft’s strategy of focusing on rendering hybrid cloud deployments using Azure more flexible goes right to the heart of CIO considerations regarding enterprise IT cloud adoption and stands to position Azure strongly, particularly given the prevalence of RHEL within the enterprise. Expect Microsoft to continue deepening its partnership and cloud-related acquisitions as it puts the cloud first and stakes out its contention as the world’s premier cloud provider for the enterprise.