Bonum Certa Men Certa

Microsoft Azure Stagnating

Reprinted with permission from Mitchel Lewis, former Microsoft employee

Azure chart
Source: https://www.bloomberg.com/news/articles/2021-07-27/microsoft-posts-sales-profit-gain-shares-drop-on-azure-concern



It’s not a secret that Microsoft’s future depends on Azure not only being successful, but dominant. With Google Workspace dethroning Office 365 in the cloud productivity markets, Windows needing a complete re-write since a decade ago and their consequent monopoly on exploits and ransomware attacks in the PC and Server markets, much is riding on Azure’s ability to dominate the cloud infrastructure space as Microsoft has done with the OS, productivity, and server spaces before.

One consequence of Microsoft’s dependence on Azure is that Microsoft can post its best quarter ever and investors will get spooked if Azure’s revenue growth slips in the slightest. It also doesn’t help when their CFO Amy Hood admitted that Azure slowing revenue growth still performed better than she anticipated.

“Forty-five percent was both better than we expected and driven by consumption growth, which is very good,” Hood said in an interview. “Demand is healthy. The overall execution was better than I expected.” -Amy Hood


Unlike before though, Microsoft isn’t starting at the top as it did in the OS, Productivity, and Server spaces. Instead, Microsoft was 2 years late to the market and has to compete with the likes of AWS instead and claw market-share away from them. And this is bad news for Microsoft as competing with other tech monopolies in established markets is not something that they’re especially good at; they aren’t the same company that mothballed IBM all those years ago.

The success of Microsoft’s business model relies mostly on them being among the first movers of infant markets, becoming the industry standard, and entrenching its products throughout said industry; lock-in if you will. In turn, their products no longer need to compete on quality, cease to evolve, and stagnate no differently than the human race as they have no ecological competition. Apparently, the law of natural selection even applies to markets.

In doing this, Microsoft’s frustrating, insecure, and unstable architecture renders users change and technology averse, traumatized if you will, and consequently vying to keep everything the same. Further, they can artificially inflate the switching costs of moving to their competition, derail migration efforts to their competition even if it’s better technology, and maintain dominance. Put simply, Microsoft’s products and services create a moat of sorts that keeps users in and competition out while allowing them to compete with themselves. Mitigating their defenses is much easier said than done.

Being a first-mover that optimizes their solutions for lock-in is a double whammy for Microsoft and no one seems to care; hence why they do it. This happens to be why Windows, Active Directory, Server, and Exchange are still in play today despite being legacy, expensive, complex, frustrating, and unstable for users and admins alike. It’s simply too ingrained and users/admins are rendered apathetic to change.

While Microsoft can’t exactly take credit for this brilliant aspect of their business model, they can absolutely laugh all the way to the bank at anyone who is criticizing them about their quality woes without realizing that they don’t even have to compete on quality; at least until Azure became their last hope.

One immediate problem with their tactics though is that they don’t bode well in markets that are already well-established nor is it easy to re-structure a company to engineer for quality when it’s structured to maximize lock-in. Although absolute genius goes into engineering products for lock-in, especially when realizing that all of their engineers are trying to do their best/ethical job, this heroin-esque approach to engineering is systemic and cannot be turned off like a light switch; quite the contrary. Any manager at Microsoft can and will affirm that Microsoft is a big ship to steer and such a restructuring could take years to fully implement.

As such and much like their founder Bill Gates, Microsoft isn’t equipped for fair competition, hence why they lose their ass in markets they’re late to, nor are they known for being a good sport at that. And as they have shown repeatedly with cloud, mobile, social, gaming, and laptop markets, Microsoft is consistently a fish out of water when entering well-established markets because they are not optimized to compete on quality which is the only card that a new entrant has to play against the status quo; exhibit Zoom and Slack. All of which stacks the deck further against Microsoft’s ambitions with Azure.

To highlight this and although Microsoft is doing great things in the cloud space with Office 365, they were late to the market, ironically among the last to host their own services, and are in second place while losing further ground to Google Workspace. The same is true of Azure in that it was 2 years behind AWS to the cloud infrastructure market.

Azure curve

And although Microsoft and analysts claim Azure to be second in the cloud infrastructure space from a revenue perspective, Microsoft has yet to corroborate this with data and is refusing to post individual performance metrics of Azure after a decade of production. Based on what little we’ve seen though, AWS revenue is growing while Azure revenue growth is shrinking which is the opposite of what Azure needs to do. Meanwhile, AWS revenue grew 9% in the last year.

No matter where you look, you can find Microsoft consistently omitting all key performance indicators (KPIs) worthy of mention concerning Azure financials or usage; MAU, P&L, CPA, ARPA, RPE, etc; nada. Meanwhile, you’ll find a whole host of ambiguous metrics such as vague growth rates, total user counts instead of monthly use statistics, and containers like the Intelligent Cloud averaging various offerings together. All of which takes significantly more effort than simply reporting individual performance and is frankly hard to keep under wraps for 12 years. Meanwhile, AWS has no problem reporting on AWS’s performance; they have nothing to hide.

Oddly enough though and while it’s even their policy to never report on KPIs, they definitely track them and occasionally post them but only if they exude a dominant market presence. In doing this though, Microsoft has a tell so to speak. Put simply, when products are doing fantastically, Microsoft will break protocol from time to time and report KPIs. But when products are doing horribly, Microsoft seems to hide behind their bogus policy so as to keep KPIs under lock and key while sugar-coating poor performance with ambiguities instead.

In doing this though, this being not reporting common usage and financial metrics while further hiding individual performance in the Intelligent Cloud, Microsoft has made it impossible for analysts to evaluate where Microsoft stands in the fold compared to AWS or Google Cloud. Ironically, the assessments declaring Azure to be in second place among cloud providers are speculative at best.

“Muddy waters make it easy to catch fish.”Chinese Proverb


With all of this in mind, it’s easy to see why Microsoft needs investors to believe that Azure’s position is strong and why Microsoft is working so hard to keep Azure’s performance under wraps; that dog don’t hunt. Although I can only speculate, it seems as if the KPIs surrounding Azure do not exhibit dominance or a route to dominance that Microsoft needs to project in order for share prices to keep rising while its stagnant revenue growth serves as further evidence of this.

If said KPIs did exhibit Azure’s dominance or even a route to dominance, then Microsoft would have no reason to be shy and release them in the face of increasing scrutiny of their persistent refusal to report on these metrics. And their refusal to post these metrics while muddying the waters with pointless statistics/rates and odd financial containers instead isn’t exactly a good omen so far as the health of Azure is concerned; if not symptomatic of the contrary. Put simply, if Azure truly had a big ol’ dong then Microsoft would have thrown it on the table by now rather than hiding it behind excuses and obscure metrics for over a decade.



To be fair though, Microsoft could indeed be shy about Azure’s performance for the past 12 years. Azure could be doing great for all I know. What I do know is that omission is the most common form of lying with statistics, followed by obfuscating matters with bogus metrics, and Microsoft doesn’t have an incentive to resort to these squid and ink tactics if Azure is in great shape. All stars go through an inflationary phase before they go supernova.

You’re welcome to believe otherwise though. You’re welcome to believe that the 71.355 billion Microsoft spent on stock buybacks since March of 2018 were made to benefit the shareholders too; but that’s for another day.

Recent Techrights' Posts

[Meme] The Heart of Staff Rep
Rowan heartily grateful
 
Sven Luther, Lucy Wayland & Debian's toxic culture
Reprinted with permission from disguised.work
Coroner's Report: Lucy Wayland & Debian Abuse Culture
Reprinted with permission from disguised.work
Links 18/04/2024: Misuse of COVID Stimulus Money, Governments Buying Your Data
Links for the day
Gemini Links 18/04/2024: GemText Pain and Web 1.0
Links for the day
Gemini Links 18/04/2024: Google Layoffs Again, ByteDance Scandals Return
Links for the day
Gemini Links 18/04/2024: Trying OpenBSD and War on Links Continues
Links for the day
IRC Proceedings: Wednesday, April 17, 2024
IRC logs for Wednesday, April 17, 2024
Over at Tux Machines...
GNU/Linux news for the past day
North America, Home of Microsoft and of Windows, is Moving to GNU/Linux
Can it top 5% by year's end?
Management-Friendly Staff Representatives at the EPO Voted Out (or Simply Did Not Run Anymore)
The good news is that they're no longer in a position of authority
Microsofters in 'Linux Foundation' Clothing Continue to Shift Security Scrutiny to 'Linux'
Pay closer attention to the latest Microsoft breach and security catastrophes
Links 17/04/2024: Free-Market Policies Wane, China Marks Economic Recovery
Links for the day
Gemini Links 17/04/2024: "Failure Is An Option", Profectus Alpha 0.5 From a Microsofter Trying to Dethrone Gemini
Links for the day
How does unpaid Debian work impact our families?
Reprinted with permission from Daniel Pocock
Microsoft's Windows Falls to All-Time Low and Layoffs Reported by Managers in the Windows Division
One manager probably broke an NDA or two when he spoke about it in social control media
When you give money to Debian, where does it go?
Reprinted with permission from Daniel Pocock
How do teams work in Debian?
Reprinted with permission from Daniel Pocock
Joint Authors & Debian Family Legitimate Interests
Reprinted with permission from Daniel Pocock
Bad faith: Debian logo and theme use authorized
Reprinted with permission from Daniel Pocock
Links 17/04/2024: TikTok Killing Youth, More Layoff Rounds
Links for the day
Jack Wallen Has Been Assigned by ZDNet to Write Fake (Sponsored) 'Reviews'
Wallen is selling out. Shilling for the corporations, not the community.
Links 17/04/2024: SAP, Kwalee, and Take-Two Layoffs
Links for the day
IRC Proceedings: Tuesday, April 16, 2024
IRC logs for Tuesday, April 16, 2024
Over at Tux Machines...
GNU/Linux news for the past day
Inclusion of Dissent and Diversity of Views (Opinions, Interpretations, Scenarios)
Stand for freedom of expression as much as you insist on software freedom
Examining Code of Conduct violations
Reprinted with permission from the Free Software Fellowship
Ruben Schade's Story Shows the Toxicity of Social Control Media, Not GNU/Linux
The issue here is Social Control Media [sic], which unlike the media rewards people for brigading otherwise OK or reasonable people
Upgrading IRCd
We use the latest Debian BTW
The Free Software Community is Under Attack (Waged Mostly by Lawyers, Not Developers)
Licensing and legalese may seem "boring" or "complicated" (depending on where one stands w.r.t. development), but it matters a great deal
Jonathan Cohen, Charles Fussell & Debian embezzlement
Reprinted with permission from disguised.work
Grasping at Straws in IBM (Red Hat Layoff Rumours in 2024)
researching rumours around Red Hat layoffs
GNU/Linux Continues to Get More Prevalent Worldwide (Also on the Desktop)
Desktops (or laptops) aren't everything, but...
Who is a real Debian Developer?
Reprinted with permission from Daniel Pocock
Links 16/04/2024: Many More Layoffs, Broadcom/VMware Probed (Antitrust)
Links for the day
Links 16/04/2024: Second Sunday After Easter and "Re-inventing the Wheel"
Links for the day
Upcoming Themes and Articles in Techrights
we expect to have already caught up with most of the administrivia and hopefully we'll be back to the prior pace some time later this week
Links 16/04/2024: Levente "anthraxx" Polyák as Arch Linux 2024 Leader, openSUSE Leap Micro 6 Now Alpha, Facebook Blocking News
Links for the day
Where is the copyright notice and license for Debian GNU/Linux itself?
Reprinted with permission from Daniel Pocock
Halász Dávid & IBM Red Hat, OSCAL, Albania dating
Reprinted with permission from the Free Software Fellowship
Apology & Correction: Daniele Scasciafratte & Mozilla, OSCAL, Albania dating
Reprinted with permission from the Free Software Fellowship
Next Week Marks a Year Since Red Hat Mass Layoffs, Another Round Would be "Consistent With Other Layoffs at IBM."
"From anon: Global D&I team has been cut in half."
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Monday, April 15, 2024
IRC logs for Monday, April 15, 2024