Azure Could Save Microsoft Corporation (MSFT) From the Death of Windows

Page 1 of 2

Shares of Microsoft Corporation (NASDAQ:MSFT) jumped over 1% earlier in the week — a notable move for such a monstrous company, especially given the selloff in the broader market. The gain was prompted by the company’s deal with long-time rival Oracle Corporation (NASDAQ:ORCL).

Going forward, Microsoft Corporation (NASDAQ:MSFT) will be a major cloud services supplier for Oracle’s enterprise software. Ultimately, that push into the cloud could be enough to offset the decline of the company’s Windows business.

Microsoft Corporation (MSFT)

The death of the PC

Alongside news of Microsoft’s partnership with Oracle Corporation (NASDAQ:ORCL), research firm Gartner released another report on the ongoing decline of the traditional PC. Gartner now expects sales of traditional PCs (laptops, desktops) to decline about 10% in 2013, with consumers increasingly opting for mobile devices.

Microsoft Corporation (NASDAQ:MSFT)’s efforts to get into the mobile market have largely fallen flat. Windows 8 — intended to serve as a hybrid operating system for both tablets and PCs — has been heavily criticized, while Windows RT tablets have sold poorly.

Given the failure of Microsoft’s mobile strategy, Gartner now expects Google’s Android to largely replace Windows as the world’s dominant operating system by 2017.

This seems like a particularly bad development for Microsoft Corporation (NASDAQ:MSFT) shareholders. In the last quarter, the company’s Windows division accounted for nearly a quarter of Microsoft’s revenue and profit.

Microsoft’s Azure

But, despite the fact that Microsoft Corporation (NASDAQ:MSFT) could be on the verge of losing a quarter of its business, not all investors are deterred. In April, hedge fund ValueAct bought up about $2 billion worth of Microsoft stock, with a 3-5 year time horizon.

As ValueAct explained, the basic PC operating system is becoming less relevant. Increasingly, cloud-based software is replacing local solutions, and Microsoft Corporation (NASDAQ:MSFT)’s Azure puts the company in a great position.

With Azure, Microsoft is one of the biggest players in the public cloud space. The company claims that half of the fortune 500 uses Azure to some extent.

Using Azure, software developers can host their applications on Microsoft Corporation (NASDAQ:MSFT)’s servers — making them available directly over the Internet.

That isn’t to say that Microsoft has hit a guaranteed home run with Azure. Unlike Windows — which still, for the most part, has a monopoly on the traditional PC — Azure faces many major competitors.

Most notably, Amazon.com, Inc. (NASDAQ:AMZN), with its Amazon Web Services (AWS) and Google Inc (NASDAQ:GOOG) with Compute Engine. Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT) have been fighting a price war in recent months, while Google Inc (NASDAQ:GOOG) is making a strong push into the market.

Still, the deal with Oracle could give Microsoft’s Azure the edge. Forrester analyst James Staten concluded as much in a recent blog post, writing that the Oracle Corporation (NASDAQ:ORCL) deal gives Microsoft Corporation (NASDAQ:MSFT) a “clear competitive advantage” over its rivals like Amazon.com, Inc. (NASDAQ:AMZN).

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!