|To: Sr K who wrote (19532)||8/1/2020 3:07:04 PM|
|From: Glenn Petersen|
|Microsoft’s Satya Nadella Switches Gears in Pursuit of TikTok|
Consumer products have been a minefield for the software giant even as Xbox has succeeded
By Aaron Tilley
Wall Street Journal
July 31, 2020 10:54 pm ET
For Microsoft MSFT 0.54% Corp. Chief Executive Officer Satya Nadella, buying TikTok would mark the boldest in a string of big deals and could reshape a tech giant that has lately thrived by focusing on corporate customers.
Microsoft is in talks to potentially spend billions of dollars to acquire the U.S. operations of TikTok, the Chinese-owned video-sharing app, The Wall Street Journal and others reported Friday. The discussions come as President Trump said that he was considering steps that would effectively ban the app from the U.S. A Microsoft spokesman declined to comment.
Mr. Nadella, chief executive since 2014, has already used deal-making to bolster Microsoft’s reach, but an acquisition of TikTok would depart from the path he has steered toward more of a focus on products and services for business.
The company that soared to dominance on the back of its Windows operating system software has had a mixed experience with consumer-facing businesses. Its Xbox gaming platform is successful, and it has expanded its line of Surface computers, but its search engine Bing has struggled to gain traction against Google. And Microsoft largely abandoned the smartphone business after Mr. Nadella took over.
Microsoft, in June, shut down its live-streaming service Mixer, and it said it was working to move the service’s community of broadcasters and viewers over to Facebook Inc. Days later it said it was permanently closing its retail stores that were already shuttered during the pandemic. Microsoft’s existing social network, LinkedIn, is focused on professionals.
A TikTok deal “would be a big bet on the consumer social media space, which the company has stayed away from over the last decade,” said Dan Ives, an analyst at Wedbush. “An aggressive acquisition (or strategic investment) of TikTok would be Microsoft throwing its hat in the ring and trying to compete with other tech giants such as Facebook in a new avenue of growth for the next decade for its consumer business,” he said in a note Friday.
TikTok’s large user base of young people does overlap with that of Xbox, which is Microsoft’s biggest business that is wholly consumer-focused, enjoying 65% sales growth in the last quarter. Xbox has become hugely popular during the pandemic with people stuck at home, and it is expected to enjoy a further boost this year when Microsoft launches a new gaming console. Videogames have increasingly come to function as social-media networks of their own, with players interacting and chatting in real-time over the internet.
“For Microsoft, getting an audience like TikTok’s would be very positive,” said Brad Reback, an analyst at Stifel Financial Corp. “I’m sure there are all kinds of ways to monetize and integrate back into Xbox.”
An acquisition could also bring risks, particularly when regulators in the U.S. and abroad are growing wary of the broad power of the biggest tech companies. It would also come as social-media companies have drawn increased scrutiny over how they moderate political speech on their platforms, an area of controversy Microsoft has been able to avoid.
“I’m not sure what would be the huge value proposition to Microsoft doing this given the regulatory environment we’re in,” said Bernstein Research analyst Mark Moerdler.
The CEOs of some of the biggest U.S. tech companies were grilled in Congress this past week over their dominance and deal-making in the midst of growing antitrust concerns in Washington. Microsoft, which had its own run-in with regulators on antitrust matters two decades ago, wasn’t in the spotlight, though rivals have accused it of unfair practices.
A deal would pull Microsoft into the increasingly tense political dynamics between the U.S. and China, which have clashed over technology, foreign policy and other issues. The White House pushed for the sale of TikTok’s U.S. business after expressing concern it could pass on the data it collects from Americans streaming videos to China’s government, something the social-media company said it wouldn’t do. A TikTok deal, people familiar with the matter said, would also involve TikTok’s Beijing-based parent, ByteDance Ltd., and the White House, signaling Microsoft may have the Trump administration’s blessing for a transaction.
A purchase of part of TikTok would deepen Microsoft’s exposure to consumers, an area where it has repeatedly stumbled. Under Mr. Nadella’s predecessor, Steve Ballmer, the company spent $7.2 billion on Nokia NOK 7.42% Corp.’s mobile- phone business, only to take a $7.6 billion writeoff on the deal. Consumer efforts under Mr. Ballmer, such as the Zune portable media player that was designed to compete with Apple Inc.’s iPod, as well as the television and movie studio Xbox Entertainment Studios, were scrapped.
Mr. Nadella, instead, focused on corporate businesses, including the booming cloud-computing field, helping to revive Microsoft’s fortunes and restoring it to being one of America’s most valuable companies.
Microsoft’s biggest acquisitions under Mr. Nadella have all targeted corporate customers. It closed in 2016 its biggest deal ever, the roughly $26 billion acquisition of LinkedIn. Its largest deal since then was the $7.5 billion agreement two years ago to buy the coding-collaboration site GitHub Inc., which underpinned Mr. Nadella’s effort to transform the software giant beyond its legacy products and focus on fast-growing areas such as cloud computing.
“Under Satya, they’ve really spent energy in doing more enterprise-related acquisitions,” said Ubaid Dhiyan, a director at technology-focused investment bank Union Square Advisors LLC.
One notable exception came with Mr. Nadella only a few months in the top job, when Microsoft spent $2.5 billion in 2014 on Mojang AB, maker of the “Minecraft” videogame, in a bid to reach a younger audience.
Microsoft has undertaken 21 transactions in the past 12 months alone, according to FactSet, with a combined value of around $2.3 billion. Those have largely been smaller deals to strengthen the company’s cloud-computing offering.
A deal for TikTok would require Microsoft to diversify in a way that it hasn’t yet under Mr. Nadella, said S. Somasegar, a former Microsoft corporate vice president who left in 2015 and is now a managing director at the Seattle venture capital firm Madrona Venture Group. But there is an element that is consistent with previous acquisitions, he said.
“If you look at the major acquisitions over the last five years or so,” he said, “the common theme is to acquire a vibrant community of customers that is both critical and net new add to the Microsoft community.”
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Write to Aaron Tilley at email@example.com
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|From: Don Green||9/3/2020 6:51:42 PM|
|Leaked Salary Spreadsheet Reveals Microsoft Employee Earnings for a Second Year|
Sharing compensation data has become an annual tradition at Microsoft during this time of year
At Microsoft, like most tech companies, seniority and compensation is based on a person’s level. At Microsoft, the levels start at 59 and go beyond 80. Microsoft’s senior positions start at level 63, according to the crowdsourced tech compensationLevels.fyi.
The average entry-level engineer or program manager will have a total compensation of $125,665.
The compensation spreadsheet shared with OneZero was obtained from the Young Microsoft FTE group on Facebook, which means the data is skewed toward younger employees. More than 250 of the 310 respondents in this year’s compensation sharing spreadsheet were levels 59 to 62.
Based on this year’s respondents, the average entry-level engineer or program manager will have a total compensation of $125,665. A vast majority (87%) of that will come from an average base salary of $111,096, with an average cash award of $10,701 and stock award of $3,867.
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|From: Don Green||11/22/2020 5:43:32 PM|
|Microsoft’s Latest Windows 10 Win Comes From An Unlikely Source... Apple|
With the launch of the M1 processor and the inclusion of the ARM-based silicon into the new MacBook Pro and MacBook Air, Apple has achieved more than set up the Mac for a new germination. It’s helped Microsoft join it. The Surface Pro X saw its processor updated this year, and Windows 10 on ARM can expect to get a significant boost thanks to Apple’s decisions.
... [+]Future Publishing via Getty ImagesFirst up, and perhaps the biggest influence on the Pro X’s reputation, is the lack not just of killer apps, but the keystone apps used by many.
So many of the Surface Pro X reviews included a list of apps that the reviewer believed was key that would either not run natively on Microsoft’s ARM platform, or would only run under emulation with the associated impact on performance and battery life. And yes, I’m looking at everyone who wanted Photoshop.
Although Adobe was on stage at the launch of the Pro X in 2019, it took until November 2020 for any of the creative cloud apps debuted as ARM native apps. That Photoshop appeared in beta for both the macOS and Windows 10 ARM platforms just a few days after the firs ARM-based MacBooks were launched will have been noticed by many.
Compared to the rest of Windows 10, the footprint of the ARM devices such as the Surface Pro X is tiny. Contrast that to Apple’s ‘all-in’ move, which will see every new Mac running on the ARM-based family that is being marketed as ‘Apple Silicon’. Working with the former could be seen as a passion project, working with the latter is a necessity.
And that significant push from Apple will, like a line of dominos, support Windows 10 on ARM as well.
I’m intrigued to see what Google’s next move will be. With so many of its services reliant on Chrome, it is in its interest to have Chrome available for as many platforms as possible. Right now there are no native ARM builds for macOS or Windows 10… ish.
The building blocks of the Chrome browser are available for ARM. Microsoft’s own Edge browser is built around Chromium, the open source software project sponsored by Google. The Chromium browser project also has regular ARM builds that allow yo install the Chromium browser directly (contrary to popular belief you can install ARM apps from outside the Windows Store).
Chrome for Apple Silicon showed up briefly last week before being pulled for technical issues. No doubt it will be back. I doubt that Google will want to leave Windows 10 on ARM without its own browser while covering off Apple’s ARM ambitions.
It’s much harder to ignore two major platform running on ARM than a smaller subset of one platform. With Apple in the room, Microsoft will get a lot more attention.
And then there’s the hardware itself. Consumers may not pour over the detailed benchmarking or chip specification, but they understand that a laptop will have more battery life, that it will be lighter, and it will run ‘faster’. Apple has certainly got that message over with the new MacBook Air and MacBook Pro machines. Putting aside Microsoft’s Surface family for the moment (even though it can offer an extra two to three hours over the Intel-based Surface Pros), the likes of Dell, Lenovo, and HP, are all going to be looking at the reaction to the new Macs.
While they are not going to be able to commit to switching over every single product in the way that Apple has, then can certainly introduce ARM variants, or potentially a new line of ARM machines that will offer the same benefits over the Intel machines. Which will create a virtuous cycle of more ARM machines.
Microsoft showed the way last year in its own quiet way. Now Apple, with all of its pomp and circumstance behind the new machines has not only legitimized Microsoft’s decision, but created some friendly rivalry that should push the two ARM platforms forward to reach new highs. After all these are but the first iterations from the two companies.
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|From: Don Green||11/22/2020 5:50:52 PM|
|Microsoft: Ready For Takeoff|
Microsoft posted a strong set of cloud-centric results in its Q1 FY21 earnings report.
Its Azure revenue growth rate accelerated on a sequential basis, coming in significantly higher than industry leader AWS'.
Readers and investors may want to remain invested in the software giant.
It seems like Microsoft’s ( MSFT) stellar growth trajectory in the cloud vertical, is far from fizzling out. The company reported a strong set of Q1 FY21 results -- revenues from the Azure platform grew faster than industry peers and its cloud-centric revenues rose once again, in spite of the currently uncertain macroeconomic conditions across the globe. More to the point, the software giant's cyclicality in its Intelligent Cloud revenue reduced further. This should reassure investors that Microsoft’s growth momentum is still intact and that it still has ample room to grow in the near future. Let's take a closer look.
(Image source, Image labeled for reuse)
The DataWe’ll be largely discussing Microsoft’s Intelligent Cloud segment in this article. The software giant has other business verticals as well but its Intelligent Cloud segment is by far its largest in terms of revenue generation, accounting for about 35% of the company’s overall revenue in Q1 FY21. In this article, I’ll attempt to have an in-depth discussion on this one segment alone, along with Microsoft’s Azure, in a bid to apprise readers about the latest sales data and what we can expect from the company in the near future.
For the uninitiated, Microsoft’s Intelligent Cloud segment is comprised of services such as Azure, GitHub, SQL server amongst others. Its revenues grew at the fastest pace compared to the company's two other reporting segments, namely More Personal Computing and Productivity and Business Processes.
Like any business, Microsoft's Intelligent Cloud revenue also has an element of cyclicality, with peaks and troughs forming in Q4’s and their subsequent Q1’s, respectively. The segment’s sequential revenue growth in past Q1's has declined between 5% and 12% in recent years but the figure dropped only 3% this time around, indicating that Microsoft is making notable progress towards reducing its cyclicality and accelerating the segment’s overall growth.
Another key data point worth looking at is, Azure’s revenue growth. Microsoft disclosed in its Q1 FY21 earnings report that the cloud platform’s GAAP revenue grew 48% on a year over year basis. Per our database, Azure’s revenue growth accelerated on a sequential basis and it was also higher than comparable figures from Amazon AWS ( AMZN) and Google Cloud ( GOOG)( GOOGL) during Q3 CY20 (which Microsoft refers to as its Q1 FY21).
(Source: Business Quant)
Here’s another perspective for the same data. The growth rate for Azure accelerated by about 100 basis points during the quarter on a sequential basis, whereas AWS’ comparable figure rose by only 7 basis points, thereby suggesting that Azure gained revenue-based market share in the cloud infrastructure market during the quarter at AWS’ expense.
This leads us to an important question -- what does this mean for Microsoft’s investors?
The InterpretationFor starters, Azure’s revenues are estimated to account for a significant 17% of Microsoft’s overall revenue – up from just 4% three years ago. In spite of its sizable revenue base, Azure remains as one of the fastest growing revenue drivers for Microsoft. So, I think it’s needless to say but the platform has grown to become a key revenue driver for the company and its rapid growth rate has the potential to lift Microsoft's overall revenue higher in coming years.
More to the point, analysts estimate that a significant portion of Microsoft’s valuation is comprised of cloud business and/or Azure platform (such as here and here). So, when the Azure’s revenue slowed down during Microsoft’s Q4 FY20, it fueled speculation about how the platform is losing competitiveness against AWS and other cloud platforms, and that it would eventually drag Microsoft’s overall financials lower.
But the software giant dispelled such concerns in its Q1 FY21 earnings report, with Azure’s revenue growth accelerating sequentially and the cyclicality in Intelligent Cloud’s revenue dropping even further. So, Microsoft’s latest earnings report should reassure anxious investors that the company’s cloud-centric growth trajectory is still intact. I’ll also contend that Microsoft’s robust cloud revenue growth could encourage analysts to raise their price targets for the company, especially since the analyst community is valuing Microsoft largely on the basis of its cloud business.
Third, we've also seen from the chart above that Azure’s revenue growth has remained higher than industry leader AWS, indicating that the former is still competitive and expanding its revenue footprint at a rapid rate, contrary to what the bears would suggest. Azure has already increased its share in the cloud infrastructure market by about 500 basis points in recent years and if its revenue growth trajectory continues, then we can expect its market share to further increase going forward as well.
Lastly, we must remember that we’re still in the middle of a pandemic. There have been COVID-19 flare-ups across a few major end-markets and some countries have even reinstated lockdowns, which at the end of the day, may be limiting cloud infrastructure-related spending. This is lost revenue opportunity for the entire cloud infrastructure industry.
So, in my opinion, it’s a commendable feat that Microsoft’s cloud business continues to do well in spite of the challenging economic conditions. There is now the possibility that Microsoft’s cloud business could post revenue growth acceleration once we get past the pandemic (hopefully sometime in CY21) and when economic conditions eventually improve across most major markets.
Final ThoughtsIt's evident from the chart above that Microsoft's Intelligent Cloud segment has posted the fastest revenue growth, compared to the software giant's other two reporting segments, in all of the last 11 quarters. Its Azure platform, which falls under the Intelligent Cloud segment, was also a revenue outperformer in the last quarter -- its revenue grew faster than Microsoft's other services and also faster than Amazon's AWS.
This data should dispel rumors and reassure investors that Microsoft's cloud-centric strategy is working well, and that it's likely to bolster the software giant's overall financial growth in the foreseeable future as well. So, I reiterate my bullish stance on the company; readers may want to stay invested in the name. Good Luck!
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