Microsoft reported strong revenue growth for its first fiscal quarter of 2019 with the company touting its Azure cloud platform as a driver of that growth. However, a sequential slowdown in some cloud segments could set up an interesting reporting period against rivals like Amazon Web Services (AWS) and Google.
But that rate of growth was down across some of its cloud-related businesses compared with what the company had been posting.
As an example, commercial cloud revenues increased 47 percent year over year to $8.5 billion. However that was down from the 53 percent year-over-year surge it witnessed in the previous quarter.
And, while overall Azure revenues increased 76 percent year over year in its latest quarter, that growth was less than the 89 percent Microsoft posted for its fourth fiscal quarter of last year. And in fact, its most recent growth was its lowest year over year compared with all four quarter of its fiscal 2018.
Company management had expected that slowdown, telling Business Insider that it was “due to the law of large numbers, not to any problems with the business.”
And that excuse does have some weight.
A recent Synergy Research Group report found that Microsoft posted market share gains during the second calendar quarter of this year well ahead of larger rival AWS. Those two firms remained firmly in first and second in the market.
However, that same report noted that China-based cloud provider Alibaba posted the largest market share gain for that time period. And that was ahead of Alibaba posting its most recent quarterly results showing a 93 percent year-over-year increase in cloud revenues.
But, that Synergy Research report did show that Alibaba ended the period as only the No. 5 vendor in terms of overall market share among its peers.
Microsoft could begin to see at least some domestic tailwinds that were blowing on Alibaba. Reports surfaced last month that the Chinese vendor would pull back from its cloud operations in the U.S. in part due to political hostility and trade pressure between the U.S. and China.
And it should also be noted that all of the segment players continue to pale in comparison against AWS.
“Revenue growth at Microsoft, Google, and Alibaba far surpassed overall market growth rate, so all three gained market share, but market leader Amazon maintained its dominance as its market share nudged up a percentage point to 34 percent,” the report stated. “It remains bigger than its next four competitors combined.”
Microsoft’s management is intently focused on its larger rival. CEO Satya Nadella took pains to note that the company was targeting the enterprise cloud space where it’s seeing strong adoption from customers that are not interested in getting services from a vendor that “sells them technology on one end and competes on the other.”
AWS and Google will both report their latest results on Thursday.