Microsoft turns up the profit dial on Azure by cutting discounts

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Microsoft's Azure platform is growing at a feverish pace with the company saying in their most recent earnings call that the platform had jumped 150% from the year before. But with Microsoft cutting costs for users in other areas, such as Windows, it needs to recover that revenue with other products, like Azure.

Microsoft has recently put the kibosh on a discount plan that was provided to customers who were willing to commit to a monthly spend for 6 or 12 month increments. These plans have been discontinued and Microsoft is not saying much about the plans being dropped other than that they will have more to share in a month or so.

There are many logical reasons why Microsoft is cutting the plans, including the fact that they may not be popular with customers; although, they do seem like an easy way to save some money if you know your expected expenditures for Azure. Microsoft has been lowering prices across the board for its own services that use the cloud to stay competitive with Amazon and Google, so this could be a move to remove one discount from the pool to help keep the service well into the black.

Another thing to consider as well, is that if your product is built in the cloud, it's not a trivial process to jump services. All of the big players know this, so they want you to get locked into their stack, which means that getting a customer in the door is more important than providing long-term discounts. Knowing this, new promotions may be in the pipeline to lower the cost of entry, knowing that they can recover the costs on the backend.

Azure is the future of Microsoft, while other products like Windows and Office will not go away anytime soon, their cloud platform offers the best chance for revenue growth.

Via: GigaOM

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11 Comments

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Sucks about them cutting these plans. We are currently using their 6 month pre-paid plans and saving ton of cash but they have been lowering their prices a lot to where what we were paying 12 months ago with a plan is now cheaper without (and much cheaper with)...

I have to say, whilst we've no current intention of actually putting anything on Azure, I activated my Azure account (because of my MSDN subscription) and spent a bit of time setting up various services within it - virtual machines, SQL databases, etc. I was extremely impressed at how slick it all was and have to say if I was starting up as a business and needed servers, I'd have to give serious thought to whether I ran them myself in a colocation facility or looked into something like Azure. It was pretty impressive - so much functionality.

"Are people actually using it?" REALLY??

Azure is the fastest growing, more profitable (making more than a billion on every quarter) cloud platform currently, and analysts say that azure will overtake market leader amazon next year! search or read abut what's going on the tech world before commenting about something!

TheRealTripleH said,
Isn't Azure just O365 that companies get when they renew their EA?

No, it's not. It's way, way, way more than that.

TheRealTripleH said,
Isn't Azure just O365 that companies get when they renew their EA? Are people actually using it?

Absolutely nothing to do with O365 other than O365 using Azure as it's back end but. Also Azure is extremely popular and getting more and more each day. It is one of the most profitable divisions at Microsoft nowadays and one of the primary reason why they picked their current CEO who led the Azure division before that.

It's a site about MS and MS's products filled with people who use MS's products and services almost exclusively. It's very useful and informative but like anything that is dedicated to one platform done by fans of that platform it's obviously going to be heavily slanted in MS favour. They are after all very passionate about MS and heavily invested in their services.

Just like I visit NintendoLife regularly and enjoy the site greatly for it's news bits, but I don't expect unbiased impartiality from them. It's a Nintendo fan site, nothing will ever be as grand for Nintendo as they'd wish it to be. Nor will Azure/Surface/WinPhone/Windows/XBox ever be as amazing as Neowin would wish.

Newowin covers everything MS exceptionally well, but I don't solely take their word. I visit other sites too, and have my own experiences to colour my opinion.