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From: Don Green9/26/2017 2:47:15 PM
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Microsoft Has The Best Competitive Advantage In Cloud
Sep. 26, 2017 2:38 PM ET

Summary
Microsoft possesses an incredibly strong competitive advantage.

Microsoft's Office 365, a predecessor of Office, are the de-facto tools for productivity.

This allows Microsoft to seamlessly approach potential customers as Microsoft's product already is a big part of their lives.

Microsoft will dominate the IaaS cloud space through its SaaS offering.

Thesis
Microsoft ( MSFT) will dominate the IaaS cloud space because it has one unbreakable competitive advantage called Office 365. Its predecessor Office, and now Office 365 – a more enterprise tailored version of Office – are the de-facto tools used for productivity. As such, selling Azure from within an already established infrastructure is only natural. Most importantly, no other IaaS has this advantage. As such, I predict that Azure will become the de-facto IaaS used by enterprises.

Note: Not every cloud is the same. For example, Microsoft Office 365 is a SaaS (Software as a Service) while Azure is IaaS (infrastructure as a Service) and there are other forms of cloud such as PaaS (Platform as a Service).

Introduction
Microsoft has a tremendous competitive advantage in attempting to cement Azure as the go-to enterprise workload infrastructure. It’s so obvious and simple that you’d almost ignore it. It’s called Microsoft Office which is now transitioning to Microsoft Office 365. This article was first typed on Microsoft Office. Now, if I were an enterprise, I would take considerable measure in making sure that all my devices are protected. In an enterprise, this is called enterprise management.

Microsoft can specifically target these enterprises to sell them Azure. If we look at the numbers, they seem to be doing so and doing so successfully. An impressive 90% of Fortune 500 companies run at least one Microsoft cloud. A further 60% use at least three clouds from Microsoft. That is absolutely incredible. If we approach Microsoft’s cloud endeavors from this angle, it becomes very clear how Azure managed to report a staggering 92% growth rate ($98 adjusted for currency).

There is no company that has access to almost every enterprise in such a very natural way. SoftMaker FreeOffice, LibreOffice, WPS Office, iWork, Google Docs. What do almost all of these have in common? The fact that you probably didn’t know these were alternatives to Microsoft Office.

I would bet good money with every eight of 10 persons I meet that these alternatives are completely unknown, except for Google Docs and iWorks and iWorks is probably not even known but rather recognized to be owned by Apple because of the “I.” As for Google Docs, Microsoft has answered with Office Online.

There is no doubt in my mind that Microsoft is best positioned to penetrate enterprise infrastructure due to the fact that Microsoft is being used in almost every enterprise. It is also the de-facto suite used in smaller companies. This is an incredible competitive advantage that is unmatched by any other company. I predict that Azure will quickly become the industry IaaS leader.

Here’s how Rajesh Jha, executive vice president, explains the natural advantage and flow of Office 365:

“Dynamics and Office 365 we have integration whether it be on our web launch area, how we integrate, or whether it be an outlook. And if you were trying to extend a business process in Dynamics you would use power apps and flow, that's exactly what you would use to extend Office 365. You can go into Share Point and you can create a business process workflow front-end, good power apps that writes data back to Dynamics. And these are not things that we are contriving, these are things that our customers are naturally asking for as they start to use Office 365 that pulls in EMS. As they start using Dynamics 365 they want better integration with Office. So we do you think and the reason that 60% of Fortune 500 customers use at least three clouds from Microsoft because there's a natural synergy.”
Incredibly hard to beat
Even if another company created a much better version of Azure, they would still have to compete with the fact that Microsoft already is integrated into almost any enterprise that said company wishes to sell its product to. For any company, switching its entire enterprise infrastructure is not something taken lightly and would only be done if the benefits far out way the hassle. For example, often times, a lower price is not enough if it means that certain benefits – like an integrated platform – are lost.

This “natural synergy” as the executive vice president calls it, is definitely worth the additional cost and is something that is going to be very hard to replace. That is exactly the reason why it is such a good base from which the company can upsell Azure. It doesn’t appear like a sell, rather it appears like a natural upgrade.

Conclusion
Azure’s is still young and I expect its growth rate to last for at least the next two years. Quite frankly, as IaaS, there seems to be no competitor for Microsoft’s Azure. Of course, it will be a long way before Azure becomes a substantial part of Microsoft’s revenue but the path seems to be open with no competitor in sight for Azure.

from Seeking Alpha
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