One of the world’s largest technology businesses, Microsoft Corporation, provides personal computer devices, cloud systems and services, software, and other goods. Microsoft competes in a wide range of sectors against firms such as Apple, Amazon, IBM, and Oracle, with products aimed at both consumers and enterprises.
Microsoft earned $15.5 billion in net income on $43.1 billion in revenue in the second quarter of its fiscal year 2021, which ended December 31, 2020. In comparison to the same quarter a year earlier, net income increased 32.7 percent and sales increased 16.7 percent. The increase in net income was a considerable acceleration from the previous year’s yearly increase.
What is Microsoft’s revenue coming from?
Productivity and Company Processes, Intelligent Cloud, and More Personal Computing are the three primary areas of Microsoft’s business. Productivity and business processes include items related to productivity and communication across many platforms and devices. Personal Computing is concerned with products aimed at end-users, developers, and IT professionals.
Productivity and business products had $14.7 billion in the fourth quarter of the fiscal year 2021, Intelligent Cloud had $17.4 billion, and personnel computing had $14.1 billion. The rates of increase in all three sectors were 25%, 30%, and 9%, respectively. We could assume that the cloud industry is now a hot potato and has a high potential for growth, but how did productivity and the business product sector show 2-digit growth?
The office application is still in good condition. Especially since the online version of the Microsoft Office program has grown in popularity. Additionally, personnel in businesses and schools that require paperwork choose Microsoft Office products as their preferred tool. Despite the presence of alternative tools, switching was difficult due to familiarity with MS Office products. LinkedIn’s income has increased considerably in tandem with the office tools. Revenue increased by 46 percent as compared to the fourth quarter of the fiscal year 2021. Because the majority of firms utilize LinkedIn as their job recruiting tool, Linkedin profits from ads.
The Cloud category is also increasing at a double-digit rate, with a strong return on investment of more than 40%. The rise of the Internet of Things, as well as the shift in how internet users access information, from text to images and videos, has led to a huge increase in data processing and use. As a result, the cloud sector will benefit both today and in the future.
Now that we’ve seen how Microsoft makes money in its current state, let’s take a look at Microsoft’s future.
One of Microsoft’s most important future potentials is cloud-based autonomous driving infrastructure. Despite being ranked second in the industry, Microsoft’s revenue growth may be boosted by the cloud sector’s enormous potential. The bulk of linked gadgets will be cloud-based. One intriguing aspect of Microsoft’s approach is autonomous driving. Microsoft did not enter the market directly but instead chose to circumvent it.
Autonomous driving necessitates the processing of data from all sides of the vehicle with minimal delay. When the automobile becomes self-driving, the driver will be engaged in a variety of activities in the car, such as working, playing games, or watching a movie. Automobiles must handle a massive quantity of data rapidly and in real-time for this, which necessitates the cloud, and MS Cloud is attempting to dominate this industry.
This leads to one of Microsoft’s strategies of “not competing with clients,” which involves developing the infrastructure that autonomous driving requires rather than the technology itself. The advantage of this strategy is that, because they are not directly competing with the autonomous driving industry, they may collaborate with a large number of firms while facing little market rivalry. Companies such as Amazon and Google have entered the autonomous market directly, causing other vehicle manufacturers to favor Microsoft’s cloud technology over their competitors.
What other factors could influence Microsoft’s future?
Resources:
https://microsoft.gcs-web.com/node/27091/html
https://microsoft.gcs-web.com/static-files/c43e4da1-16a7-4564-995d-8e2596c767d3
https://microsoft.gcs-web.com/static-files/c43e4da1-16a7-4564-995d-8e2596c767d3
