The world's largest software maker
) is seeing success in the government and education sectors. Its
Office 365 suite won eight customers including the City of Kansas
City, Mo; the City of Seattle; Dupage County, the University of
Miami; the University of Colorado, and King County, Wash among
The suite won on different counts at these players. While the
Kansas City government and the City of Seattle chose the solution
to increase operational efficiency, reduce IT costs and lower
carbon footprint , the University of Miami chose it to serve as a
common platform of communication for its 40,000 odd students. The
Miller School of Medicine's adoption of cloud services makes
sense as it is situated in an annual hurricane zone. The adoption
of the service will ensure business continuity even in the face
of adverse conditions.
The Office 365 suite equips these organizations with advanced
technologies, thereby improving operational efficiency and
resource allocation. It also facilitates communication and
collaboration among organizations and at the same time reduces IT
expenses of government and education organizations and their
partners across the world.
Office 365 is sold as a service and therefore generates
ongoing revenues for Microsoft instead of a one-time licensing
fee. Launched in 2011, the new Office comes with the traditional
word processing, spreadsheets and email programs.
Microsoft's Office 365 is gaining traction in the market as it
recently launched its online version focusing on touch devices.
Further, it is being deployed at the stores of retailers such as
J. C. Penney Company Inc.
) and U.K.-based Tesco as well as government departments such as
the Texas Department of Information Resources, which chose the
software for inter-departmental activities. The latest to join
the bandwagon is the International Federation of Red Cross and
Red Crescent Societies (IFRC), which also signed a MoU with
Microsoft. Further, Microsoft's software expanded in the
healthcare sector. It also launched a specialized version for
businesses as well as for student communities.
Currently, just like other PC makers, Microsoft is also
battling the slump in the PC market caused by the sluggish
economy. In addition, the popularity of smartphones and tablets
) are cannibalizing PC market sales, further deteriorating the
scenario. Whether it can come out of the slump on the back of its
new software and OS is a wait and-see game.
According to research conducted by IDC, cloud-based services
may grow into a $100.0 billion market by 2016, representing a
compound annual growth rate (CAGR) of 26.0%. Cloud services are
expected to drive growth in IT going forward, generating 41.0% of
overall growth in IT by 2016. Thus, the strengthening of
Microsoft's position in the segment is encouraging as the PC
market is showing no signs of revival in the near future.
Microsoft reported revenues, excluding deferrals, of $21.46
billion in the second quarter of fiscal 2013, which were up 34.0%
sequentially and 2.7% from last year, in line with our estimates.
All except the Entertainment & Devices segment grew both
sequentially and from the year-ago quarter. Entertainment &
Devices were down year over year.
Microsoft has a Zacks Rank #3 (Hold).
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