What Microsofts financial disclosures reveal about Azures market position [Video]

Microsoft Corp.’s new financial disclosures include changes to the way it reports Azure metrics. The company said the change was to better align Azure with consumption revenue and by inference, more closely aligning with how Amazon Web Services Inc., the leader in cloud computing infrastructure, reports its metrics.

The accounting change removed certain mature, slower growth revenue streams and consequently raised the growth rates for Azure. It also had the effect of increasing the artificial intelligence services contribution within Azure. Although this was reported and often applauded in the media and financial circles, what wasn’t widely discussed is that while such a change increases growth rates, by definition it reduces the size of the Azure business and its resulting revenue market share.

Regardless, in our view, Microsoft is comfortable that the future AI revenue contribution within Azure combined with both higher growth rates and a greater AI contribution will foster …