Microsoft’s claim that it’s sold $1 billion worth of Azure cloud infrastructure services over the past 12 months has got to be raising eyebrows, and not just across Lake Washington at Amazon Web Services headquarters.
The sales figure was made by Curt Anderson, who heads up finances for Microsoft Server & Tools business unit, in a Bloomberg report.
The gist, with my emphasis added:
“Microsoft’s $1 billion sales figure includes Azure, as well as software provided to partners to create related Windows cloud services, Anderson said in an interview. Azure customers use the services to run corporate programs, websites and applications from Microsoft’s data centers, rather than spending on their own servers, storage machines and workers to maintain them.”
Update: Interestingly, in a response emailed Monday night, a Microsoft spokewoman said the $1 billion sales figure includes “Windows Azure and revenue from service providers such as Amazon, Rackspace and others. (Again, the emphasis is mine.)
Since neither Microsoft nor Amazon has responded to a request for comment, let’s examine the possibilities. That phrase “software provided to partners” probably means Microsoft is lumping in sales of on-premises software. It could also include Office 365 sales. Office 365 provides functionality that used to be relegated to shrink-wrap software via a software-as-a-service model.
An executive with a company that works with both Amazon and Microsoft said the latter is moving personnel from Office to its SaaS platform. “It’s a great thing but it’s hardly net new revenue or anything like what Amazon is doing with IaaS,” he said. I have followed up with the spokeswoman to see if Office 365 is part of the overall sales number. Amazon had no comment.
Microsoft launched its Infrastructure-as-a-Service competitor to AWS two weeks ago. Up until now Azure was pretty much a platform-as-a-service game and thus not directly competitive with AWS. That’s all changing now, which is probably why Microsoft is beating the drum about Azure momentum.
It’s not surprising that vendors play games with their sales numbers. What would be a shocker is if Microsoft — or any big cloud services provider — explicitly broke out what those sales numbers really include. That includes Amazon, which buries its cloud services sales number in a broader category that includes promotional and marketing activities. For its most recent quarter, that group logged $750 million in sales.
AWS is the uncontested leader in public cloud infrastructure — by its own and everyone else’s account. It recently claimed that its S3 storage service is home to 2 trillion objects. Last July, Azure said it stores 4 trillion objects. And, given Microsoft’s investment in Azure, you’d be foolish to rule it out.
Of course, another competitor, Google Compute Engine (GCE) looms. I’d expect Google to announce public availability of the service — introduced last June — at Google I/O next month.
To hear more about Microsoft’s cloud plans, be sure to check out GigaOM’s Structure Conference in June where Microsoft cloud chief Satya Nadella will speak.
This story was updated at 4:21 a.m. PST with Microsoft comment and Amazon’s non-comment.