Microsoft has confirmed that it still believes that cloud computing will continue to generate a strong income even though uptake of some of its apps-as-a-service seems to be slowing.
Microsoft’s chief executive Satya Nadella has stated that the company is set to hit the £20 billion mark for cloud computing business in 2018. He also said that the company has surpassed the $10 billion mark for the run rate on annualised commercial cloud computing services. Run rate is the term used to describe the predicted earnings of a company or particular service.
The figures are used to demonstrate to the stock market just how viable the prospects are for a particular company or services. However, critics of the ‘run rate’ predictions have pointed out that it does not take into consideration any seasonal changes or other factors that could affect growth. Some critics believe that Microsoft will not reach this £20 billion target, as they believe that the slight slowdown in growth will make it more difficult to achieve.
In Q3, the revenue from the cloud computing section of Microsoft reached $6.1 billion, a growth of just 3%. The Intelligent Cloud unit actually saw a growth of 8% in constant currency over the same time period. In Q2, it grew just 5%, but in constant currency, it was a growth of 11%.
The growth in uptake of Office 365 has also slowed slightly. For Q3, it had a 63% growth in terms of constant currency, but in Q2, this was a growth of 70%. Office 365 is part of the Productivity and Business Process Unit.