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Azure revenue surpasses Windows for the first time

Microsoft's cloud division drives up revenues in its Q4 financial results despite YoY slowdown

Microsoft Azure splash screen on a smartphone

Microsoft's cloud business revenue has surpassed income from its Windows arm for the first time ever, with the company's fourth-quarter financial results demonstrating the strength of its cloud infrastructure and services.  

It's just one of the many areas that defied analyst expectations as the Redmond-based company excelled across the board, posting revenue hikes in nearly all areas of the business.

There are no exact figures to illustrate how well Azure is doing specifically because Microsoft bundles the figures into its umbrella "intelligent cloud business". However, the revenue for the company's cloud arm increased 19% to $11.4 billion, narrowly beating Windows in its "personal computing" business which made $11.3 billion - an increase of 4%.

The prioritisation of cloud services began when Sadya Nadella took the reigns in Redmond back in 2014 and ever since, all-things-cloud have been driving the company's revenue. 

The one division in decline was Microsoft's gaming business which pulled down the revenue score for its Personal Computing arm - handing the lead to Intelligent Cloud. Overall gaming revenue declined 10% with Xbox software and services down 3%.

Other than the minor blip in gaming, the future looks healthy for Microsoft. It continues to build on its lead as the world's most valuable company, a revelation which it announced in April after it surpassed Apple and became valued at over $1 trillion for the first time ever - a feat achieved in no small part to its ever-booming cloud growth.

"It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry," said Satya Nadella, chief executive officer of Microsoft. "Every day we work alongside our customers to help them build their own digital capability - innovating with them, creating new businesses with them, and earning their trust.

"This commitment to our customers' success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack," he added.

Microsoft currently sits in second place in terms of its market share for cloud business, with Amazon Web Services (AWS) commanding a majority lead. According to Canalys, AWS dominates with a 32.8% market share, Microsoft's Azure comes in with 14.6% and Google Cloud, which recently pivoted towards hybrid cloud, has 9.9%.

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