It’s that time of the year again when tech companies report their quarterly results. For investors and the general public, this is a good time to evaluate how a company is performing, how its different sectors and what can be expected from the company over the next few months.

Microsoft announced its results for the third quarter of 2017, and surprisingly, it fell short of analysts’ expectations. The company reported a revenue of $23.56 billion while analysts were expecting a revenue of $23.62 billion. But in terms of earnings per share (EPS), Microsoft surpassed investors’ expectations as they had been expecting a revenue of $0.70 and Microsoft reported $0.73.

One of the key things to note in the results is the role played by cloud business in boosting the overall revenue of Microsoft. The cloud-based services including Azure and “Intelligent cloud” brought in revenue to the tune of $15.2 billion and this is a 11 percent increase year-on-year. In fact, Azure’s revenue jumped by 93 percent when compared to the same time last year.

According to Amy Hood, the Chief Financial Officer at Microsoft, strong execution and the growing demand for cloud business drove up the revenues this quarter and as a whole, the company expects this demand to sustain over the next few quarters as well. In this sense, they expect to generate more revenue from Azure and its “intelligent cloud” division over the upcoming months.

This is an important trend as it clearly lays out the path for Microsoft, or for that matter, many tech companies that operate in this line of business. Already, Microsoft has been investing heavily in its cognitive services and Azure platform, and we can expect this investment to increase too.

Other important gleanings from these results include the price that customers are willing to pay for services. For example, the results show that 80 percent of Azure customers use premium pricing plans. This means, customers are willing to pay more money provided they get the right value additions for the money they pay.

One aspect that we’ve been seeing is that the cloud wars have brought down the price of cloud services. Leading cloud providers like Microsoft, Amazon Web Services and Google have been slashing their prices greatly in a bid to woo more customers. Due to this trend, premium services itself don’t cost a lot and can in fact, be affordable to many clients. That said, we can infer that this demand for premium plans could be because it’s affordable and companies get more from it.

Besides cloud, Microsoft’s Productivity and Business processes segment registered a 22 percent increase when compared to the same time last year, as its revenues soared to $8 billion. Commercial office was up by seven percent while consumer revenues grew by 15 percent respectively. The Personal Computing segment took a beating though as it registered a seven percent decline in sales.

Overall, Microsoft had a decent performance though not a stellar one, and much of it was driven by its cloud business.

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Microsoft wants to expand its cloud computing presence and it believes the best way is to bring in more cloud computing developers into its fold. To this end, it has acquired a cloud container specialist called Deis from a cloud orchestration company called Engine Yard. The financial details have not been disclosed.

Deis is a technology that works well with cloud containers. If you’ve never heard this term before, container means independently deployable code that accomplish a specific task. Each of these containers are discrete and require little to no interaction with other container components. The entire logic for a single functionality is contained within it.

This container is the fundamental building block of virtualization environments. In addition, a container knows how much of processing power it needs and the calls it has to make through the respective Application Programming Interface (API).

These containers are the most essential for an agile cloud-based development environment as they can be quickly deployed when compared to monolithic architecture. Also, microservices architecture that is based on these containers, is catching up in a big way because of the need to have short deployment circles on the cloud and also to overcome the many disadvantages that come with monolithic architecture.

Handling these container components is the cornerstone of Deis’ operations. It provides three open-source tools for managing all kinds of Kubernetes deployments. These three container services are:

• Workflow – this is the technology that allows developers and organizations to deploy and manage container components.
• Helm – this is a Kubernetes manager that handles different components
• Steward – this is a Kubernetes-native broker that enables communication between different containers, on a need basis.

Since Deis specializes in creating such components, it makes sense for Microsoft to bring it under its fold before other companies get to it. Also, such a container-based environment can work well for Azure too, and this is one of the main reasons for Microsoft to make this move. With this acquisition, Microsoft hopes to catch up with AWS in terms of cloud market share.

Also, Microsoft believes this acquisition can give it a lead over other players such as Google and IBM that are fast catching up. Through this move, Microsoft has also filled a gap in cloud skills development and this can give it an edge over other players in the long run, provided other companies continue in the same state of operations.

From Deis perspective, this is the best thing that can happen to it. In general, small companies expect to get acquired by one of the larger players, so being acquired by Microsoft is in many ways an honor for Deis and its parent company Engine Yard.

So what does this acquisition mean for the cloud market as a whole? Well, not much really.

AWS is so widespread and pervasive that it doesn’t see these developments as a threat to its competition and existence. For the others, it’s simply more food to the party.

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The cloud industry is being driven by acquisitions and partnerships, as companies are looking to leverage the strengths and advances made by other companies in the same field. In a way, every company is also extending its own technology and expertise to other areas of operations by partnering with niche companies. The latest in this series is the partnership between Microsoft and Publicis.

Publicis Groupe is a marketing and advertising company that is expanding its existing alliance with Microsoft. The partnership aims to tap into artificial intelligence and behavioral data segments to offer more targeted email campaigns. Specifically, Publicis will tap into the features of Microsoft Azure and Cortana Intelligence Suite to get greater insights about the behavior and expectations of its customers. Based on this information, it wants to help its clients to create targeted campaigns that will reach out to end-users in an appealing way. More importantly, it is sure to improve the conversion rate and bring in more business and revenue for Publicis’ clients.

Publicis already has its own intelligence system called Cosmos AI, and  this will be made available to business through the Azure cloud platform. From Publicis perspective, this is a lucrative deal as its clients can now have access to both Cosmos and Azure, and this means, Publicis can charge more licensing fees from them. In fact, this combined offering of artificial intelligence can add to the revenue of Publicis in a big way.

For Microsoft too, this is a good deal as it’s another opportunity to extends its platform and collaborate with the ad agency. Microsoft is looking to optimize its platform in the best way possible, especially as it wants to take on AWS – the most dominant player in the cloud market. Also, the fact that the cloud market is growing by leaps and bounds means that more opportunities are coming up for all companies in this market, and Microsoft wants to grab as much as it can.

This partnership between Microsoft and Publicis is not something new, as both the companies have a long history of working together. In 2009, Microsoft had sold its digital agency called Razorfish to Publicis for a sum of $530 million. Interestingly, Microsoft had acquired Razorfish only in 2007 from a company called aQuantive for a whopping $6.3 billion.

So, what does this mean for the cloud industry and the many enterprises that use it?

Almost every partnership augurs well for clients because they have more choices and at the same time, they have access to more features. The same is true for this partnership too. When Cosmos data product is combined with Azure cloud platform, it’s bounty time for marketers, as they can get deeper insights into individual customers, based on which, they can customize their products, create appropriate marketing campaigns and do so much more. The best part is all this information is available in real-time, so they can come with new ways to boost their revenue.

Due to these reasons, this partnership between Microsoft and Publicis works well for everyone.

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