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Recent Developments

In June 2016, Microsoft announced plans to buy LinkedIn for $26.2 billion, its largest acquisition in history, as it aims to strengthen its position in the Cloud applications market.

SCORES Analysis

Microsoft Strengths

Microsoft parlays its leadership role in the PC world to the Cloud by bulking up on a slew of products, mobile and online services. In 2015, Microsoft CEO Satya Nadella - after proclaiming its Cloud first and Mobile first strategy as he took over the post a year earlier - said Office 365 has secured 50 million active commercial users, while Microsoft Dynamics has seven million seats under maintenance every month with an increasing number of these running Cloud-based CRM applications. Shortly after he became CEO of Microsoft, the vendor unveiled the Office version for iOS and Android smartphones.

Now more than 100 million downloads have been issued, suggesting that the massive installed base of Office applications has helped the vendor win over mobile users as well. With more than 1.2 billion PCs running Office applications in the world, Microsoft has a captive audience to convert these PC users to the Cloud every time they add or upgrade their machines.

One big advantage for Microsoft is its ability to add value to Office 365 by including features such as email, conferencing, business intelligence, business social network and unified communication for $22 per user per month under the top-level E4 plan. Recently, Office 365 pricing has become a lot more competitive with base pricing starting at $5 per user per month.

Another component of its Cloud applications strategy lies in Microsoft Dynamics CRM Online products, which have made considerable improvement since it started shipping in February 2011. In 2016, Microsoft commercial cloud, which primarily comprises Office 365 Commercial, Microsoft Azure, and Dynamics CRM Online, reached an annualized run rate exceeding $10.0 billion. Office 365 Consumer subscribers increased to 22.2 million. Microsoft Azure revenue grew 110%, with usage of Azure compute and Azure SQL database more than doubling year-over-year. Enterprise Mobility customers more than doubled year-over-year to 27,000, and the installed base nearly quadrupled year-over-year.

Again anyone purchasing Dynamics CRM will be getting Office 365 for the same price of $65 per user per month. That suggests that the bundling game that has played so well for Microsoft for years is expected to perform equally well for Microsoft in the Cloud. Microsoft’s task is to take these Cloud products to the next level by leveraging its enormous installed base along with the help of more than 630,000 channel partners.

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Microsoft HCM & Cloud HCM Applications Revenues, $M:

Type/Year 2014 2015 YoY Growth, %
Total Revenues, $M Subscribe Subscribe Subscribe
HCM Applications Revenues, $M Subscribe Subscribe Subscribe
Cloud HCM Applications Revenues, $M Subscribe Subscribe Subscribe

* HCM Applications Revenues = License + Support & Maintenance + SaaS ( Hardware and Prof. Services are Excluded )
** All revenue figures are estimates based on public records, Cloud and Non-Cloud business models in Apps Run The World's vendor database, and annual survey results including vendor feedback.

Microsoft 2015 Revenue Breakdown by Type:

Type License Services Hardware Support & Maintenance SaaS
% of Total Revenues Subscribe Subscribe Subscribe Subscribe Subscribe
Revenues, $M Subscribe Subscribe Subscribe Subscribe Subscribe

Microsoft 2015 Total & HCM Applications Revenues by Region:

Region % of Total Revenues 2015 Total Revenues, $M 2015 HCM Applications Revenues, $M
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Latin Americas Subscribe Subscribe Subscribe
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APAC Subscribe Subscribe Subscribe
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Microsoft 2015 Direct vs Indirect sales

Region Direct Sales Indirect Sales Total
Type % Subscribe Subscribe Subscribe
Revenues, $M Subscribe Subscribe Subscribe

Microsoft Customers

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No. of HCM Applications Customers: Subscribe

No. of Cloud HCM Customers: Subscribe

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Microsoft Opportunities

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Microsoft Risks

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Microsoft Ecosystem

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Microsoft Cloud Platform (PaaS) & Infrastructure (IaaS) Details

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  • Cloud Infrastructure (IaaS)
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Research Methodology

Data used in research reports are derived from publicly available documents, continuous surveys of applications vendors, customers, resellers, Independent Software Vendors, systems integrators and other verifiable sources.

Vendor shares and market forecast results are based on a combination of existing databases as well as demand side and supply side research conducted throughout the year with validation from vendors, customers, channel partners and documentations such as earnings releases and 10Q and 10K filings, vertical industry studies, regional and country-level statistics from public and private institutions(i.e. colleges, universities, government agencies and trade associations).

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