) recently announced its decision to slash prices for its Windows
Azure cloud services as part of an effort to better compete with
) cloud computing platform.
The decision to slash prices by 21% to 33% for some of its
online data services will help Microsoft to match the prices
offered by Amazon Web Services (AWS).
Windows Azure is Microsoft's cloud computing platform for
building, deploying and managing applications and services
through a global network of managed datacenters. Windows Azure
core services include Media Services, Mobile Services, Cloud
Services, Virtual Machines, Websites and Big Data. It competes
with Amazon's cloud computing platform AWS and OpSource Cloud
We view Microsoft's decision to cut prices as an aggressive
move, designed to increase its share in the cloud computing
market, where AWS has gained a lot of success. Last year, AWS
generated about $1.8 billion in revenues and is expected to grow
stronger given the increased adoption of its cloud services.
Cloud storage came into prominence in 2009, with Nirvanix and
Amazon's Simple Storage Service (S3) being two of the major
pioneers. Since then, Amazon has continued to dominate the space,
with other players like Microsoft and
) offering their own solutions.
Companies have significantly cut down their own IT
infrastructure expenses for data storage as cloud-based storage
services save both time and money.
IDC predicts that the cloud market will jump 130%, reaching
$43.0 billion in 2016. Further, Gartner predicts that around
$677.0 billion would be spent on cloud services within the
2013-2016 timeframe. Microsoft, with its solid portfolio should
be able to tap this opportunity.
Microsoft remains one of the best positioned software vendors,
given its wide range of products, emerging markets strength,
continued technology deployment at data centers and growth in
cloud computing. The company delivered better-than-expected
second quarter results with non-GAAP earnings up sequentially.
New products across segments, strength in the cloud computing
segment and share gains in search combined to generate
However, Microsoft is also battling the slump in the PC market
caused by the sluggish economy. Therefore, it is important for
the company to focus more on emerging segments such as mobile
hardware and the cloud.
Currently, Microsoft has a Zacks Rank #3 (Hold). Another stock
in the sector that is performing well currently is
), carrying a Zacks Rank #2 (Buy).
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