Tech Transformers

Why Microsoft isn't worried about its soft cloud results

Microsoft VP on the Internet of Things
Microsoft VP on the Internet of Things

Microsoft has played down the weakness of its cloud computing division in its latest results, saying that nearly three-quarters of its cloud customers are using more than one product on offer.

Third-quarter revenue in its intelligent cloud business grew just 3 percent to $6.1 billion, despite revenue from Azure more than doubling year-over-year. Investors were disappointed and its share price fell when it announced earnings on April 21.

But Azure is just one part of the cloud business which also includes its Office 365 apps and its customer relationship management software Dynamics. Jason Zander, corporate vice-president of Microsoft's Azure team, said that many of its customers are choosing to use several of its cloud products.

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"If you look at the cloud segment, we're actually getting triple digit revenue growth, we have about 85 percent of the Fortune 500 using the Microsoft cloud. Keep in mind our cloud efforts are Office 365, as well as Azure and Dynamics," Zander told CNBC in a TV interview.

"So we have over 74 percent using more than one of those services. So our uptake is going incredibly well from that perspective and this is rarely a good time for us to be pushing for market share and getting more and more customers on board."

Google competition?

Microsoft has been focusing heavily on the cloud in recent times amid a slowdown in the global personal computer market and the company's mobile division.

But there is intense competition in the space with Amazon Web Services (AWS), the e-commerce giant's cloud business, and the likes of Google and IBM all challenging in the space.

While AWS and IBM are two of the big players in enterprise cloud, Google has yet to make a big bid in the space, but analysts expect that this could be a big driver of the search giant's future earnings. But Zander said that Microsoft and Google would operate in different sectors and would not be in direct competition.

"We're an enterprise company. We've spent 30 years building enterprise credibility. We see a significant amount of customers, they want to move to the cloud, they want a trusted partner to do that. And so, from that perspective we see really good uptake there," Zander told CNBC.

"I think from a Google perspective, they haven't been an enterprise company for that long, and so I don't see as much competition showing up in those sorts of spaces."