|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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|From: Don Green||12/18/2020 8:47:27 PM|
|Intel falls on report Microsoft plans to design own chips for PCs and servers|
PUBLISHED FRI, DEC 18 2020
Intel shares dropped as much as 6% on Friday afternoon after a Bloomberg report that Microsoft plans to design its own chips for its Surface laptops and desktops as well as servers.Intel has famously had a long-running partnership with Microsoft as the prim
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|From: Don Green||12/21/2020 1:56:45 PM|
|A welcome nudge from Microsoft|
A part of the Microsoft campus in Redmond sits largely empty on Dec. 17, 2020. Microsoft, which has continued paying the wages of hourly workers idled... (Ken Lambert / The Seattle Times) More
Sometimes state decision-makers need a generous nudge from outside.
That came this month as Microsoft and other major employers urged Gov. Jay Inslee to hurry up and help get students back in school.
This welcome effort is only the latest show of civic leadership by the Redmond software giant and Washington’s extraordinary business community.
Despite toxic, anti-employer politics emanating from Seattle’s City Council, the Seattle area’s largest companies stepped up this year in remarkable ways. Both Microsoft and Amazon, for instance, continued paying wages of idled hourly workers even though their campuses are largely closed and contributed generously to help enable remote learning.
Now they are focusing on ways to get through the remainder of the pandemic, restore communities, create more opportunity and continue the state’s economic vitality.
That includes expediting the return of in-person education, particularly in grades K-5.
Opening schools turns out to be not as risky as initially feared, if disease transmission rates are relatively low in the surrounding community.
What’s also become clear is that keeping schools closed is causing severe harm to overall student progress and worsening inequity.
You know it’s bad when even Microsoft executives are distressed by how much time students are spending online on PCs and calling for a return to in-person learning.
Inslee responded promptly, adjusting the state’s safety threshold for school re-openings to a more reasonable level. That should lead to more district openings early next year.
Microsoft President Brad Smith went further and arranged to help provide safety equipment in schools statewide, in part by sharing the company’s supplies.
The company will also provide online health reporting for every school district, so local educators and families can easily see and monitor disease incidence and other factors affecting school closures.
Microsoft also is using its influence to urge early vaccination of teachers, particularly those who face greater risks from COVID-19.
Altogether this effort should benefit teachers, families and the 1.1 million students in Washington’s K-12 schools.
Microsoft also announced that it will increase its support of hourly workers and nonprofits in the state to around $250 million, with a new commitment of around $110 million.
It will continuing paying hourly workers’ wages until campuses fully return, potentially in early July.
Nonprofits received more than $98 million so far this year from the company, including around $67 million in cash and $31 million worth of technology, services and meals for needy students and families that are being provided by its cafeterias.
This is all over and above the enormous contribution that such companies make by creating hundreds of thousands of jobs, directly and indirectly.
Their success is keeping Washington’s economy relatively stable this year and enabling Washington state and even Seattle to continue spending heavily on public services.
That’s never enough for some.
But we should put politics aside this week and be grateful for support and gifts, small and large, from all our generous neighbors.
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|From: Don Green||2/1/2021 8:22:05 AM|
|Most. Underated CEO|
# 1. Microsoft's Satya Nadella, for "his ability to steer the company through a major reinvention while generating shockingly little drama. Tech analysts believe (though Microsoft won’t confirm) that the Azure cloud business Nadella has championed now accounts for as much revenue as ... Windows."
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