In spite of slowing growth, Microsoft has been flexing its cloud muscles

When Microsoft reported its FY19, Q4 earnings last week, the numbers were mostly positive, but as we pointed out, Azure earnings growth has stalled. Productivity and business, which includes Office 365, has also mostly flattened out. But slowing growth is not always as bad as it may seem. In fact, it’s an inevitability that once you start to reach Microsoft’s market maturity, it gets harder to maintain large growth numbers.

That said, AWS launched the first cloud infrastructure service, Amazon Elastic Compute Cloud in August, 2006. Microsoft came much later to the cloud, launching Azure in February, 2010, but so were other established companies in Microsoft’s market share rearview. What did it do differently to achieve this success that the companies chasing it — Google, IBM and Oracle — failed to do? It’s a key question.

Let’s look at some numbers

For starters, let’s look at the most numbers for Productivity & Business Processes this year. This category includes all of its commercial and consumer SaaS products including Office 365 commercial and consumer, Dynamics 365, LinkedIn and others. The percentage growth started FY19 at 19% but ended at 14%

When you look at just Office365 commercial earnings growth, it started at 36% and dropped down to 31% by Q4.