While for Amazon, how is Online Retailing not "Cloud Revenue", or pretty much everything for Amazon should be Cloud Revenue.
Cloud revenues between Amazon and MS are comparable from an investment point-of-view:
- sticky (unless something bad happens, if you're a paying customer in month 1, you're probably still a paying customer in month 2)
- service delivered "in the cloud" (neither vendor needs a local brick/mortar storefront)
- fixed cost: data centers, variable cost: "things" in data centers
- for enterprise accounts: high-touch salesforce and dedicated contacts
- for end-user / SMB accounts: primarily self-service via online tools
Yes, one of them gets more revenue from IaaS and the other from SaaS. Each of these, and the specific submarkets that the two of them play in, will have different growth rates and potential and affect their respective valuation.
Still, from an investment standpoint, based on the above characteristics, I'd feel reasonably good about comparing the two of them on financial and valuation metrics for the "cloud" parts of their respective businesses.
Traditional products like Office 365 may be sold as a subscription, but the market is largely saturated. Its growth is primarily dependent on productivity device growth. "True" cloud products, whether serverless or lift and shift of existing workloads, have much higher growth potential since a large percentage of the attachable market is still unreached.
That's why it's a little disingenuous for Microsoft to claim products like Office 365 and Dynamics 365 as cloud revenue. For many years before the cloud was a thing, they earned that revenue in the form of Enterprise Agreements: which are essentially three-year subscriptions for the same products.
Microsoft is going all out to sound like they are winning in this battle, but this is just PR. That said, perhaps PR will be a winning strategy...
Author also wrote this article, which if you look at his list of insights on why Microsoft is positioned better, has no substance. It reads more like an ad.
https://www.forbes.com/sites/bobevans1/2018/07/26/why-amazon...
Clickbait without substance.
> Microsoft said Azure revenue jumped 93 percent. KeyBanc analysts estimated Azure had $1.76 billion in revenue, while Raymond James analysts predicted the number was $2.05 billion.
This is a cloud hosting comparison. In the article they are comparing apples to oranges...
