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Microsoft’s prediction suggests depressing tech environment

Microsoft predicts that the technology environment will continue to be dismal.

Microsoft CEO Satya Nadella said the company grew slower than anticipated in its business-focused Windows products, identity and security services, and subscriptions to Microsoft 365 productivity tools.

She added that Azure, the company’s cloud computing service, has seen a slowdown in user growth. Although the business offers consumer goods like Xbox consoles and Surface PCs, most of its income comes from commercial customers, including businesses, institutions of higher learning, and governments. The influence will be felt there. Microsoft Cloud, which includes Azure, paid Microsoft 365 subscriptions, paid LinkedIn services, and Dynamics 365 business software, now accounts for 51% of overall sales.

Large enterprises are maximizing their spending on cloud services, a crucial growth area. This pattern continued in the first quarter of the current fiscal year, and in October, Amazon discussed how it had been assisting cloud customers in reducing expenses. – Satya Nadella

Nadella noted that Microsoft made product modifications to emphasize areas where customers may reduce cloud bill costs. Hood predicted a further slowdown in Azure’s growth. In constant currency, revenue from Azure and other cloud services increased by 38% for the entire December quarter. Hood noted that growth was in the mid-30% range in constant currency in December and predicted that the current quarter, which ends in March, would see a further decline of 4-5 percentage points.

According to Hood, the slowdown that began in December ought to continue through Q3 results for Windows commercial products and cloud services, including Windows volume licences for companies. In contrast to the fiscal second quarter’s 3% fall, her prediction for Windows commercial products and cloud services included stable revenue.