When in the news you hear about the “technology giants”, there is probably a small circle of companies that will jump to mind. Perhaps the “FAANGs” , i.e. Facebook, Amazon, Apple, Netflix, Google. And perhaps you would add to this list the chinese giants like Tencent or the japanese Softabank and, why not, even Tesla.
There is a giant, however, which is the largest of all these that we have mentioned, and that is rarely put to their footing. In the world there is only one company from the value exceeding a trillion dollars at the moment, and neither Amazon nor Apple (though both will approach you). At the time of writing this article, the only company valued over a trillion dollars ($1.076 trillion, or 1.076.000.000.000 dollars) is only Microsoft.
This estimate has recently been given a small boost after a great report on revenue. Almost every sector of the society at the time was a success, and the cloud platform Azure guide the departments in the growth, but there are also many other business segments that are growing, thanks to the transition of key products to the cloud. Even LinkedIn (acquired by the company in 2016) is doing very well. And we’re not talking about a simple good quarter. The growth trajectory of Microsoft has been evident for some time, driven by CEO Satya Nadella and his vision about the company. Vision turned into action and a well-aimed and successful, that have proven to be exactly what the company needed.
“The commitment of Microsoft in gaming, it seems more solid than ever”
The division the Xbox is not a particularly brilliant this framework at the moment, even if some of this is attributable to the fact that the Xbox is currently in a generational transition. The sales of Xbox hardware are down 50% year-on-year, but the commitment of Microsoft in gaming, it seems more solid than ever.
For a long time, there was a distinctive quality in the Xbox platform. But when Nadella took over the ship while on its way to Azure and the business of “software as a service”, has not been clear what the exact role of the Xbox in this scenario. The failure of the Xbox One compete with PlayStation 4 you are not cemented with the catastrophic launch of the console. Of course, the initial focus of the console it was on cable TV and the Kinect, soon abandoned as accepted that badly by the public, but that that played a role in the most heavy was the change of the route of Microsoft, as a company, that has left the future of Xbox in a big limbo. The race hurried to the cloud wanted to please more of the Microsoft executives, rather than the public or the developers. The lack of the support to the software of the relief is lasting for years, even until the disastrous launch was now a distant memory, leaving space for a great line-up.
Now, though, Nadella has a clear role of the Xbox in the puzzle and sees his division to play an important role in the future of Microsoft. In the course of their intervention following the financial results, mentioned in a reversal of the historical route of the consumption of video games in the direction of Microsoft, which is an indicator for certain verses prophetic of what it can do cloud streaming together with the services of computing. But, most of all, as the games are becoming multi-platform experiences across different classes of devices.
The partnership between Sony and Microsoft is the proof that the strategy of Nadella is going according to plan.
To Nadella like the idea that Microsoft is the basis of everything or, to be precise, he likes the idea that Azure become the platform that face the propeller and the mediator between all types of experiences. The brand Xbox is part of this but the Xbox is inherently something that is not quite “core” in this framework, differently from what is the PlayStation. Nadella speaks about a wide range of opportunities for Microsoft to become the central station of an infrastructure that manages every type of game, from the competitive to the decidedly casual.
“In this vision of the future, Xbox is definitely safe as a gaming platform, even if it can’t pass PlayStation in sales of hardware”
The role that Xbox play into all of this, then, is one of the main application to Azure, which act as both a milestone for the same cloud service of the company, that from the powerful marketing tool that will tell other companies where to concentrate their services on the cloud. The function of the main client is very important: all of the companies that are the main providers of cloud services, they are also the biggest consumers of their own services. Amazon carries all of its operations, digital media and retail on the infrastructure behind AWS; Google services running on the infrastructure behind Google’s Cloud Platform; and Microsoft will run services such as Office and Xbox on Azure.
The fact that the improvements to the cloud platform foraggino the rest of the business of the company and vice versa, is a key element that helps to keep these cloud services financially stable and ahead of the competitors, not to mention the idea to be reliable for customers that make use of cloud systems. The best guarantee for the products and services based on Azure is the awareness that if something goes wrong it will have impact on Xbox, Office, LinkedIn, and so on. It follows that each stop will be averted.
The fact that Sony will work closely with Microsoft on cloud services for the PlayStation is also an important part of the message from the point of view of gaming, something that Nadella has bothered to talk about. If both Microsoft and Sony rely on Azure for their cloud services, gaming, it will be very difficult to convince other producers of the games is to move towards other platforms.
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In this futuristic vision, the Xbox one is absolutely a gaming platform completely safe, even if they can’t stop the overwhelming power of the PlayStation in the sales of the console. This discrepancy will, in fact, ever less relevant as the infrastructure of cloud gaming to take hold and flourish. Besides, who cares really in Microsoft as long as a large part of these “rivals” will be connected to the infrastructure of the Azure of the house of Redmond?
This is the type of thinking that is at the basis of the success of Microsoft under the leadership of Nadella, by offering their software the best on the platforms of rivals, opening its platforms for use by competitors, aiming for the best of the best becoming agnostics than devices, operating systems, and provenance. In this perspective, success in the gaming industry by Microsoft might be less and less of the type “to sell more PlayStation consoles” and much more “who cares, given that it is Nintendo that Sony are ending to use Azure as a cloud environment”?
This may not appease the fanaticism of the fanboys, but it is definitely a great guile from the point of view of mere business. One of the oldest sayings said that during a gold rush, the best thing is not to become a seeker, but set up a shop to sell pickaxes to the miners. Microsoft is doing just that, and its division the Xbox is evolving in a direction that will earn always and forever, no matter what will happen to the competitive framework of the game platforms and publishers. No wonder, then, if the company is worth a trillion dollars.