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Microsoft results points to new uses for Teams after coronavirus

Satya Nadella, CEO of Microsoft, says he looks forward to new working practices emerging post-Covid-19, with collaboration seamlessly fitting in with tools for remote working

Microsoft has reported third-quarter 2020 revenue of $35bn, up 15% compared to 2019.

The company stated growth of 15% in its productivity and business processes business to $11.7bn. Office Commercial revenue grew 13%, while Office 365 Commercial revenue grew 25%. In a transcript of the earning call, posted on the Seeking Alpha financial blogging site, chief financial officer (CFO) Amy Hood said this increase was being driven in part by what she described as “a strong upsell to E5”.

Revenue in the company’s Intelligent Cloud business grew 27% to $12.3bn, driven by what Hood said was “continued customer demand for our hybrid offerings”. She added that the company’s server products and cloud services revenue increased 30%, while Azure revenue grew 59%, driven by continued strong growth in consumption-based business.

Windows Commercial products and cloud services grew 17%, which Hood attributed to demand for Microsoft 365 and the company’s advanced security products.

When asked during the earnings call about economic pressure on its customers’ IT budgets, Microsoft CEO Satya Nadella discussed how more IT workloads were being run in the public cloud. During the earnings call, he pointed to beverages firm AB InBev and confectionery giant Mars moving their SAP workloads to Azure.

Nadella suggested that organisations will move workloads to the cloud, as it is more efficient and has helped organisations continue operating during the Covid-19 coronavirus lockdown.

“It is the only way for you to have even the business continuity required in times like this, and your needs going forward of increasing digitisation are going to be met with better pricing, better economics at a unit price level for the given business,” he said.

Nadella also discussed how Microsoft was seeing a huge increase in use of its Teams collaboration service, as a result of the coronavirus pandemic.

“We saw more than 200 million meeting participants in a single day this month, generating more than 4.1 billion meeting minutes. In healthcare alone, there were more than 34 million Teams meetings in the past month.

“New capabilities enable providers like Northwell Health, New York State’s largest health provider, to deliver first-class telehealth. And the NHS in the United Kingdom is using Teams to ensure staff have the tools they need to do their vital work.”

Among the examples of how collaboration tools such as Teams could evolve to support emerging post-coronavirus working practices, Nadella said: “Teams is about actually getting work done where meetings and video is one part. What is happening in a meeting is the important context that can’t get lost.

“That’s what’s going to have continuity, whether it’s the whiteboard you created, the OneNote you shared, the document you edited together, or the business process alert that you are responding to. Thinking that through holistically is the most important thing – and that’s where our focus will be.”

As an example of how such collaboration could be combined, he said: “One of the most exciting things to me that happened even in this Covid-19 response is that people were able to use Power Platform [Microsoft’s low code tool] to build new applications in hours, put that into Teams and then get their first-line workers to be able to track, say, PPE [personal protection equipment] because there was no ERP [enterprise resource planning] system that did that. That ability to digitise at high rates and do it in the context of how people work and collaborate speaks to the power of the Teams platform.”

Discussing Microsoft’s results, Daniel Elman, analyst at Nucleus Research, said: “As society has become more digitised and technology dependent, companies like Microsoft that produce and service technology that underpins the global technology ecosystem have grown even more insulated from normal market hardship.

“Microsoft Azure, the Windows operating system, and much of the Microsoft Office suite are the key drivers of this. Azure has steadily grown to challenge AWS [Amazon Web Services] for supremacy as a public cloud service provider.”

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