The Windows 10 cloud business, once the darling of Microsoft, is increasingly a more lucrative proposition, analysts say.
Microsoft’s latest quarterly report released Tuesday showed that its cloud business accounted for $9.4 billion of the company’s total $47.4bn in revenue for the quarter.
Microsoft has invested $1.2 billion in cloud technology and said that it expects its cloud revenue to grow by another $1 billion this year.
Microsoft said in its earnings release that its Cloud Service Provider (CSP) revenue was $1,976 million for the fourth quarter.
That’s an increase of $400 million from the same quarter last year.
That puts the cloud business in second place among the companies with a revenue share of more than 50%.
But analysts expect that cloud revenue will grow by $1 trillion in 2019, making it one of the biggest revenue drivers in the company.
“Microsoft’s cloud revenue has been on the rise for years, and now that it’s finally getting the support it needs to drive growth, it’s a huge deal,” said John Gorman, director of research for market research firm Gartner.
Microsoft will make the announcement about its cloud earnings next week.
In its fourth quarter, Microsoft generated $9 billion in revenue, or about 13% of total revenue.
That compares to a $2.9 billion revenue share for Apple’s App Store, which accounts for about 3% of Microsoft’s total revenue for that quarter.
“Windows 10 is clearly the most important platform for the company to make money, but it’s also a platform that can also be a competitive business for others,” said Tim Dyer, chief executive officer of IDC.
Microsoft shares were up 1.6% at $56.70 in late trading Tuesday.
The S&P 500 index is up about 0.2%.
The Nasdaq composite index is down about 0:20% at 4,903.04.
