Microsoft is very focused on growing LinkedIn and its cloud computing business.
That’s what Microsoft CEO Satya Nadella told analysts during the company’s latest quarterly earnings on Thursday.
For the just-closed quarter ending in March, LinkedIn posted an operating loss of $386 million on revenue of $975 million, leaving plenty of room for improvement. Microsoft chief financial officer Amy Hood said she expects LinkedIn’s sales slightly improve in the current quarter to $1.05 billion.
Last year, Microsoft paid $26.2 billion for LinkedIn in a deal that it hopes will pay dividends by letting the company incorporate data from LinkedIn’s 500 million users into other products. That data will be particularly valuable to Microsoft’s Dynamics business software, which folds sales, marketing, accounting, and manufacturing management software under one brand umbrella.
For years, the Dynamics brand, which incorporated a passel of separate products, has operated in the shadow of the company’s cash cow Windows and Office lineups. But no longer. Those discrete products have been folded into the Dynamics 365 suite, which Microsoft hopes will be even more attractive when combined with LinkedIn data access.
Salespeople using Dynamics to find new prospects will be able to tap LinkedIn data about people, their titles, and companies. Dynamics 365, the latest version of the software, competes with software from Salesforce (CRM), Oracle (ORCL), and SAP (SAP).
As for cloud, Microsoft said sales from its “intelligent cloud” business—which includes Azure, Office 365 subscription software, along with other software that runs inside corporate data centers—grew 11% to $6.76 billion in the quarter from $6.09 billion a year ago. Profit was up just over 2% to $2.18 billion from $2.17 billion year over year.
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In response to questions about the impact of price cutting by rivals like Google and Amazon, Nadella said Microsoft can withstand it and still prosper by getting customers to use not just basic Azure computing and storage services but higher level (and pricier) database and Internet of Things (IoT) offerings as well.
Nadella cited shipping giant Maersk, which just signed a big cloud deal with Microsoft, as an example. “Maersk may start out with commodity workloads running in Azure or Office 365 but then end up using HoloLens and also Dynamics 365,” he noted. HoloLens is Microsoft’s augmented reality headset that can be used in industrial as well as consumer settings.
Microsoft’s IoT software, for example, could help Maersk not only track shipments of individual products and the containers they are shipped in, but also monitor humidity and temperature of those containers.
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“When everyone talks about cloud, the most interesting part now is the edge of the cloud,” he noted. This is where data from sensors in the field or factories or ships is gathered and analyzed. From those aggregation points data can be funneled to the more centralized Azure cloud.
Microsoft is betting that its years of experience helping customers run their own data centers will make it a better partner than pure “cloud” rivals that do not have so much experience at customer sites. Google and Amazon, however, also have their own IoT offerings.