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Microsoft’s results for the second quarter of the 2016 financial year mirror the decline in the PC market. Despite having a new client operating system in Windows 10, the company reported a 6% fall in its OEM Pro revenue, which means it made 6% less on Windows licences sold to PC manufacturers than it did last year.
The company has shifted business towards the cloud, specifically Office 365 subscriptions. In a transcript of the earnings call posted on the Seeking Alpha financial blogging site, CEO Satya Nadella said: “We have 60 million monthly active users for Office 365 and that continues to grow.”
But while Office 365 will remain a key growth area for Microsoft in the devices market as it cements its office productivity suite as the preferred choice for people who want to work in the cloud, it has now set its sights on the untapped IoT (internet of things) market.
IoT offers a huge growth opportunity for the software industry. Data collected from an almost limitless number of internet-connected sensors needs to be collated, analysed and acted upon, and a public cloud is the logical route to do this.
Speaking to Computer Weekly last month, Doug Hauger, general manager for national cloud programmes at Microsoft, said: “We have multiple car companies using Azure for the internet of things.”
He gave the example of Chinese car maker Corus, which builds all the telematics for its cars on Azure. What is interesting about Corus’ approach, said Hauger, is that it uses a third party to build the actual car.
“Corus sees the real value as the customer experience, in how it provides mapping and integration to the customer and the cloud helps it to achieve this vision,” he said.
Microsoft has now launched the IoT Hub, which acts as a bridge between customers’ devices and the back-end application for storing, analysing and acting on IoT data in real time.
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The company said the Azure IoT Hub provides a secure way to connect, provision and manage billions of IoT devices sending and receiving trillions of messages each month.
The Hub supports protocols such as MQTT, HTTPS and AMQPS and integrates with other Azure services, such as Azure Machine Learning, which Microsoft said can be used to provide deep insights that power IoT businesses.
Another web service available on Azure, Azure Stream Analytics, can also be used in IoT applications to act on the results output by Azure Machine Learning in real time by simultaneously monitoring millions of devices and taking action.
Last September, the company introduced pre-configured building block services in the form of the Azure IoT Suite. It also promised it would work to make its products interoperable through a certification programme across Windows Azure, Linux, mbed and RTOS operating systems. Companies working with Microsoft include Arduino, Beagleboard, Freescale, Intel, Raspberry Pi, Samsung and Texas Instruments.
Among the businesses using Microsoft Azure for IoT products is ThyssenKrupp Elevator. The company collects sensor data from its lifts, which is then transmitted to the cloud and combined into a single dashboard that serves up two basic types of data: alarms, which indicate an immediate issue; and events, which are stored and used for management.
According to Microsoft, the system contains an intelligent information loop: data from elevators is fed into dynamic predictive models, which continually update datasets via seamless integration with Azure.
Microsoft said the elevators can actually teach technicians how to fix them. With up to 400 error codes possible on any given elevator, that can significantly improve efficiency in the field, resulting in dramatically increased elevator uptime.
Business management consultant McKinsey estimated last June that the potential value of IoT would be $3.7tn. Its report Unlocking the potential of the internet of things noted that the complexity of IoT systems, the limited capabilities of many customers to implement them and the need for interoperability and customisation provide opportunities for hardware, software and service providers to provide “end-to-end” IoT solutions to meet specific needs.
The report’s authors said: “We expect the division of value among players will shift over time, with an increasing share going to suppliers of software and analytics.”
Last month, analyst Gartner estimated that advanced analytics would grow by almost 14% to reach $1.5bn in 2016, disrupting many industries. Gartner said leading organisations were developing proprietary algorithms that could lead to faster, more insightful analysis, and were moving away from “gut feel” decision-making.
With Azure’s platform as a service and the machine learning capabilities it can now offer, Microsoft looks well positioned as an IoT cloud provider. Although the price war with Amazon will continue to drive down the cost of IaaS, it is the richness of the platform for new application areas, such as IoT, that will ultimately differentiate public cloud providers.