Microsoft pours billions into cloud research
Microsoft Corporation (NASDAQ:MSFT) also wants in on the action. In 2011, the company spent almost all of its annual research and development budget on cloud computing, which was approximately $9.6 billion. The cloud-first strategy, which the firm will integrate with Windows Azure, aims to be an easier process than some of the previous cloud computing techniques, which were more difficult to operate, the company stated. Details about exactly how it will work haven’t been released, but with so many people on the Microsoft Corporation (NASDAQ:MSFT) Windows operating systems, I expect a full integration of the system with cloud computing. Already, the company reported its Azure business has helped create a cloud service reaching the $1-billion mark.
Microsoft Corporation (NASDAQ:MSFT) looks to be the leader right now in cloud computing with its Azure. The reported revenue is certainly an indication of that. What’s more is that the firm has one of the highest returns on equity in the software and programming industry. In fact, the asset turnover is 60.3. Furthermore, the profit margin of over 21% is identical to International Business Machines Corp. (NYSE:IBM) and shows tremendous strength in keeping expenses down. However, I have my doubts about management at the firm, due to the apparent user-unfriendliness of the company during the announcement of restrictions on the upcoming release of the Xbox One. Gamers are restricted to only give a game away once, and it has to be to a person who has been a friend for at least 30 days. The firm is also not performing well with the usability of Windows 8. Microsoft Corporation (NASDAQ:MSFT) seems to be forgetting its most important asset – its customers – and that could hinder the appeal of Azure and any future cloud programs released by the company.
Market research
Two hundred IT professionals were surveyed recently with the software, CloudPassage, which found that about 80% of those who participated used cloud computing for at least one purpose, according to GDP Insider. By the end of this year, at least 70% of additional organizations are planning to use cloud services. All three companies have their claws firmly clasped to the concept of cloud, and all three look set to develop some type of revenue from the attempt. In other words, there may be more than one firm securing major profits. The question isn’t whether there is big money to be made in cloud computing, but rather, which company’s stock will hit the skies first? My money is with International Business Machines Corp. (NYSE:IBM) if the company buys SoftLayer.
Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com, Inc. (NASDAQ:AMZN), International Business Machines Corp. (NYSE:IBM), and Microsoft Corporation (NASDAQ:MSFT).
The article Competition for the Cloud Heats Up originally appeared on Fool.com.
Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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