Two Microsofts: the good and the not so bad
In Microsoft's latest quarterly earnings, even with a booming quarter, it looks like there are two Microsofts, one that is booming and the other that is waning. Microsofts cloud business is doing well but it's OS department is slowly fading.
Microsoft has a major lead in enterprise cloud with Azure. Azure grew 97 percent year over year. The ease of moving enterprise, on-premise infrastructure made up of Windows based servers into the Azure cloud is a major reason that enterprises are moving to Microsoft's Azure. With other cloud services such as Google's Compute, Amazon's AWS, SAP and Oracle is making inroads with their own cloud offerings, Microsoft has a huge lead due to the easy transition. Microsoft's dominance in workstation and sever OS makes the transition very easy compared to the others.
On the other sied, Windows continues to be a sore spot for Microsoft as PC sales slows down, little market share in the tablet OS market and near zero share of the phone OS market. Even Surface's garnered many good reviews, its sales were down. Microsoft's gamble to switch Windoiws from a buy once model to a subscription based model simillar to Microsoft Office 365 may help prevent the slide but it may take 3 to 4 years before it pans out.
Microsoft's dual pronged strategy may payoff in the long run as cloud computing gains momentum. Get people hooked on the Microsoft Windows model to ease their transition to Microsoft's Azure. Currently, almost two-thirds of its revenue comes from it's cloud offering. The Business software such as Office 365 and Dynamics 365 is on par with the consumer division ( Windows and Xbox ). PC OS is shrinking but business productivity and cloud offerings are more than making up for the decline. Microsoft is actively transitioning from an OS company to a cloud company and if it is successful in converting Windows to a subscription based service, Microsoft will continue to dominate the computer industry.