The tech giant also said that thanks to a strong performance under the chief executive, Satya Nadella, they now claim to be one of the world’s most valuable public companies.

Rising above the predictions from Wall Street, the company turned a profit of $33.72 billion this period. This was an increase of 12% from the previous quarter.

Thanks to cloud

It’s thought that one reason for the increase was due to the company’s continuous investment in cloud. Over the past 10 years, these ventures have revolutionised the working progress behind the organisation as, rather than buying applications that run on their own servers, customers are renting computer power and paying for subscriptions from Microsoft.

The organisation also feels that offering customers cloud-based versions of its Office productivity suite contributed to the growth in profit. They also mention the reputation of Azure, the world’s alleged 2^nd largest cloud service that the tech company provide, for the upsurge.

Brad Reback, an analyst at Stifel, Nicolaus & Co. suggested that the organisation is “a clear winner in the digital transformation trend that corporations of all sizes are now undertaking.” Continuing, “They are a vendor of choice.”

Competition for Microsoft

Accounting for around a third of sales for this period, Microsoft’s cloud computing business increased by 39%.

However, the rise of cloud computing services in other companies may provide a challenge to Microsoft. Google’s sister company, Alphabet Inc. and Amazon’s AWS are also in the running for delivering cloud services to customers.

Research company, Gartner Inc., has predicted that spending on cloud will continue to rise and this year alone will grow 18%.

As for Microsoft, Chief Financial Officer Amy Hood believes there is nothing for them to worry about as she told analysts that they will continue to rise in profit.

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The IT market is predicted to grow by 0.6% to $3.74 trillion this year, according to research company Gartner, Inc.

It is thought that the adoption and development of cloud has made a significant difference in both the rise and fall of various sectors of the IT market.

Cloud’s positive impact

On the positive side, cloud computing is having a huge impact on the growth of the industry with so many companies using it as part of their infrastructure.

As the cloud continues to develop, it’s hoped it will have a greater financial impact on the computing sector and will cover a wider range of application software segments, including collaboration services, content services, and office suites.

John-David Lovelock, research vice president at Gartner said: “Spending in old technology segments, like data centre, will only continue to be dropped.”

Before 2018, the cloud had mostly been used in business process outsourcing and application software.

The negative impact of cloud

However, as a negative, the devices market had the biggest loss of 4.3% from 2018 to $682 billion, with the development of cloud being thought to have an impact on this.  Spending money specifically on IT-based devices (such as PC’s and Laptops) is dropping each year around the world due to saturation and commoditisation as cloud lets these devices have a longer life and needs less powerful equipment to run them.

Lovelock spoke of the development of tech making it harder for devices to grow in profit.

He said: “There are hardly any ‘new’ buyers in the devices market, meaning that the market is now being driven by replacements and upgrades… Add in their extended lifetimes along with the introduction of smart home technologies and IoT, and consumer technology spending only continues to drop.”

The general growth of the IT market

The biggest growth in the IT sector was experienced by Enterprise Software services which had a 9% increase in 2019 with a total profit of $457 billion.

Lovelock continued, “While there is great variation in growth rates at the country level, virtually all countries tracked by Gartner will see growth in 2019. Despite the ongoing tariff war, North America IT spending is forecast to grow 3.7% in 2019 and IT spending in China is expected to grow 2.8%.”

“Although an economic downturn is not the likely scenario for either 2019 or 2020, the risk is currently high enough to warrant preparation and planning. Technology general managers and product managers should plan out product mix and operational models that will optimally position product portfolios in a downturn should one occur,” said Mr. Lovelock.

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The report Pathways to Profit: Leveraging Next Generation Technology to Drive Profitable Growth, found that financial institutions are concerned they don’t have expertise and sufficient resources to realise the full potential of the above capabilities.

Top priorities of capital market firms and their biggest pain points was revealed by the report, with financial institutions feeling challenged to invest and find expertise to help realise the full potential of AI, DL and cloud computing.

‘Collaborating with industry partners’

The report also found utilising the scale of Fintech partners to effectively deploy AI, machine learning, and robotics, and collaborating with industry partners who can create new networks, could bring value to all surveyed participants.

Tim Gokey, president and chief operating officer of Broadridge, said: “While banks are poised to benefit from rising interest rates, stronger economic conditions, growing profits, buoyant stock markets and leading firms are establishing partnerships with technology specialists to enhance their operational infrastructure and secure their future.

‘Unique business offerings’

“These Fintech providers offer an important resource to banks, providing knowledge in areas where these institutions are resource constrained and enabling them to focus on ways to augment their own unique business offerings.”

The report concludes capital markets firms are adopting cloud technology at a different pace, depending on their business, and a better understanding of internal customer data for capital markets firms will improve marketing and sales opportunities, as well as client experience.

Key executives at 69 capital markets firms were surveyed, in a bid to learn more about their strategies to grow revenues and improve efficiency.

Written by Leah Alger

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