Microsoft announced yesterday that its commercial cloud revenue “run rate” had hit $12.1 billion as of the end of its June quarter. (That’s the fourth quarter of Microsoft’s 2016 fiscal year.)
This “run rate” measures the amount of money Microsoft collected from cloud services like Office 365, Dynamics CRM, and Azure in June, multiplied by 12. By way of comparison, Amazon reported that its cloud services were approaching a run rate of $10 billion in Q1, although Amazon Web Services really competes only against Azure (not the other Microsoft cloud services).
Microsoft has said that it plans to reach a run rate of $20 billion for cloud services by the end of its 2018 fiscal year. As this chart from Statista shows, as long as its growth continues at a similar rate, that goal is in sight.
The metric is important as CEO Satya Nadella tries to transition Microsoft from dependence on selling packaged software that runs on companies’ own computers, and toward cloud services, which Microsoft hosts and sells to companies on a subscription basis.