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Microsoft Cloud Revenue: Quarterly Azure, Office 365 Results

Microsoft cloud revenues continued to surge in Q3 of fiscal year 2020, and the software company predicts it will meet Wall Street’s financial expectations for Q4 fiscal 2020. The bold statements — delivered today — reinforce growing demand for Microsoft Azure and Office 365 despite the coronavirus pandemic.

Among the Q3 highlights: Revenue for Microsoft’s Intelligent Cloud business was $12.3 billion — up 27 percent. Within that business unit, Azure revenue surged 59 percent.

The figures easily outpaced rival Alphabet’s Google Cloud Platform. Google Cloud revenues were $2.8 billion in Alphabet’s most recent quarter, up 52 percent compared to the corresponding quarter last year, Alphabet said on April 28, 2020.

In a prepared statement about Microsoft’s earnings, CEO Satya Nadella said:

“We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything. Our durable business model, diversified portfolio, and differentiated technology stack position us well for what’s ahead.”

Cloud Pricing Pressure, MSP Opportunities?

Still, the initial earnings report did not discuss cloud margins.

In recent weeks, rumors about public cloud pricing pressures have emerged. Some large customers apparently have been pushing Google, Microsoft and Amazon Web Services) for pricing relief. But during the April 28 earnings call, Alphabet executives did not mention any such pricing pressure on Google Cloud Platform and G Suite service — though some deals are taking a bit longer to close.

We’ll check out Microsoft’s April 29 earnings call, along with Amazon’s April 30 earnings call, for more clues about cloud profit margins.

Meanwhile, strong demand for AWS, Azure and Google Cloud could be good news for leading public cloud MSPs — most of which focus on one or more of the three leading Infrastructure as a Service (IaaS) platforms.

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