Microsoft, Again, Shows That It Can Adapt To A Changing World

Microsoft, Again, Shows That It Can Adapt To A Changing World
Image: Microsoft

Microsoft has made plenty of high-profile errors over the years. But they have also proven they can adapt quickly when the world around them changes. Those of us with a few grey hairs will remember the late 1990s and Microsoft’s bet on the MSN Network. Bill Gates had recently released his book, The Road Ahead, which had to be hurriedly rewritten into a second edition because the first version totally underestimated the impact of the internet.

Two decades later, the company faced a shift to cloud computing and subscription software – direct threats to their server and software cash-cows. But their latest earnings report shows that they have adapted and are thriving again.

Microsoft doesn’t garner the same headlines as Amazon, Google or Apple but it remains a very significant player in enterprise IT, particularly as they maintain a hybrid strategy rather than one that is solely focused on the cloud.

The company’s earnings report for the third quarter says the company now has 135 million active Office 365 business users and another 30 million consumer subscriptions on their books. The Azure business continues to grow – it delivered 93 per cent revenue growth over the same quarter last year – with businesses having the option of replicating the Azure infrastructure model on-prem before either making a full move to Azure cloud services or adopting a hybrid model.

Even LinkedIn – which I have to admit seemed like a bizarre acquisition to me – pulled in over a billion dollar of revenue for the quarter.

Microsoft has made mistakes over the years but, at its heart, it is a software company. And that focus is what is behind their recent success. Now that it has embraced a world where Windows isn’t the dominant operating system, it’s created a portfolio of software and services that puts it on the servers, desktops, laptops, tablets and smartphones of almost everyone in one form or another.

And fears that subscriptions would cannibalise their core business have proven unfounded as revenues continue to grow, albeit through product segments that didn’t exist a decade ago.

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