After a year in which it changed CEOs, took a write-down for unsold tablets, pulled some unpopular Web ads for smartphones and missed Wall Street expectations, Microsoft appears to have righted its course. In fact, the Redmond, Washington, software giant appears to be in a stronger position than in years.
There are many reasons why, including the emotional boost and sense of purpose that CEO Satya Nadella has provided the company. But ask members of Microsoft’s partner ecosystem why they are smiling of late and many will say “Office 365," the company’s cloud suite of collaboration, communications and productivity tools.
Sales have grown steadily for the past year and are even accelerating in many partner organizations, according to solution providers. The numbers prove them right.
Back in January, Microsoft said the Office 365 platform was its fastest growing business in history. Since then, momentum has continued to build. In March, the company unveiled a free, read-only version of Office for the Apple iPad, which has since been downloaded more than 27 million times. It has encouraged users to buy more full-featured subscriptions of Office 365.
In the fiscal 2014 third quarter ended March 31, the company announced that its Commercial Cloud business more than doubled year-over-year, led by a surge in Office 365 subscriptions. In a call with analysts discussing the company’s quarterly results, Nadella said that he was “really, really excited about what's happening" with the company’s franchise. Office 365, he told the financial community, “is the core engine that's driving a lot of our cloud adoption."
Today, Office 365 is on track to reach annual sales of $2.5 billion, according to Microsoft. At that level, the business of Microsoft Office 365 will soon rank as one of the top 20 largest software companies in the world. Moreover, the growth in the platform means that Microsoft could soon become one of if not the world’s-largest provider of Software-as-a-Service (SaaS) technologies.
Today, one in four Microsoft enterprise customers has Office 365. In addition, there are more than 3.5 million subscribers of Office 365 Home Premium, according to Microsoft. There are also more than 1 million users inside the U.S. government. And quarterly uptime, which last quarter reached 99.99 percent, has increased of late despite the additional demands of new users.