For the first time since, Microsoft’s cloud business unit generated more revenue than its business units that include Windows and Office.
Microsoft announced Thursday in its earnings that its cloud business unit, called Intelligent Cloud, generated $11.4 billion in revenue. In comparison, its More Personal Computing unit, which includes Windows products, Surface, gaming, and search, generated $11.3 billion. And its Productivity and Business Processes unit, which includes Office, Dynamics 365, and LinkedIn, generated $11 billion.
The company first instituted this corporate reporting structure, breaking its businesses down into these three specific segments, in 2015.
Intelligent Cloud includes Microsoft‘s cloud Azure and other services. In total, revenue for this business increased 19% from this time the previous year. This was largely driven by Azure, which grew 64% from the previous year. Microsoft did not break out the revenue numbers for Azure.
However, Microsoft does share a figure it refers to as “Commercial Cloud,” which basically sums up the revenue it gets from Azure, Office 365, and other business-focused cloud services. In the last quarter, Commercial Cloud revenue was at $11 billion, up 39% from the same period of 2018. That accounts for about a third of overall Microsoft revenue.
Azure growth did slow down from the previous quarters. Last quarter, Azure’s year-over-year revenue growth was 73%, and the previous quarter, it was 76%.
Still, Patrick Moorhead, founder, president, and principal analyst at Moor Insights & Strategy, says he’s not worried about this slowdown — it’s only natural that as Azure gets bigger, it’ll get that much harder to maintain growth.
“I am not concerned with the declining Azure growth rates right now,” Moorhead told Business Insider. “I am keeping my eye on it, but right now, I attribute it to the law of very large numbers. As we have even seen from AWS, as the revenue base gets massive, it’s hard to keep the rate of increase going.”
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