Microsoft Corporation (MSFT) Takes Office 365 into New Worlds

Microsoft Corporation (NASDAQ:MSFT) has been getting some momentum for its Office 365 platform and its cloud computing services, including Azure. a couple of recent announcements have just solidified that growing momentum, as Microsoft (MSFT) has moved itself into a branch of the federal government and into China in separate deals that will feature Office 365. These two deals my bode well for the firm as the cloud-computing universe continues to expand, and certainly investors in Microsoft (NASDAQ:MSFT) stock like billionaire fund manager Seth Klarman of Baupost Group, may be optimistic.


Domestically, Microsoft Corporation (NASDAQ:MSFT) won a contract with the U.S. Environmental Protection Agency (EPA) to provide Office 365 cloud-based services for collaboration and communications through longtime IT provider Lockheed Martin Corporation  (NYSE:LMT) as part of a four-year contract worth nearly $10 million. There is no word as to what company provided these services in the past, but to see Microsoft Corporation (NASDAQ:MSFT) winning the contract against other cloud-computing services from Google Inc. (NASDAQ:GOOG) and others, can be seen as a significant step forward for Redmond. The services will be provided for about 25,000 EPA employees, and Lockheed Martin Corporation (LMT) will oversee the integration and transition, with the Office e-mail migration expected to be completed in early 2013.

It is expected that the services will improve efficiency and save the EPA about $12 million in energy costs – which amounts to a 20-percent ROI – over the life of the contract, and the EPA joins the Federal Aviation Administration and the U.S. Department of Agriculture as federal divisions that utilize Microsoft Corporation (NASDAQ:MSFT) cloud computing.  “There is tremendous potential in the cloud, not only for transforming the way government employees work, but also for helping agencies meet their environmental and energy efficiency goals,” said Greg Myers of Microsoft Federal in a statement.

On the international front, Microsoft Corporation (NASDAQ:MSFT) secured a partnership agreement with the Shanghai Municipal Government and 21Vianet  Group Inc. (NASDAQ:VNET) to provide Office 365 and Windows Azure cloud-computing services into China. With those China customers who wish to work with Microsoft Corporation (NASDAQ:MSFT) for services, will have access to Office 365 from data centers in in Singapore and Hong Kong. “The public cloud market in China will grow from $297 million in 2011 to $3.8 billion in 2020. The three segments of the virtual private cloud market will grow from $44 million in 2011 to $1.6 billion in 2020. The unparalleled economic growth in China will certainly help spur strong cloud market growth in China across most cloud segments through 2020,” according to a report from Forrester Research.

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