Amazon will break out financial results from its cloud computing business, Amazon Web Services, for the first time on April 25, and that’s good news for Microsoft.
Analysts at Barclays think that Wall Street has gotten too bearish on Microsoft, and isn’t paying enough attention to its cloud product, Azure.
But Amazon’s results could help analysts realise how much Microsoft is making from Azure.
“For Microsoft we believe higher-than-expected profitability in AWS would actually given Microsoft investors some indication of what margins could look like in the near to medium term, which in our view would be viewed positively by investors.”
Microsoft has never broken out detailed results from its cloud service, Azure.
But Microsoft Azure is focused on being a “platform as a service” (PaaS), which means that it offers more help to developers to write entire applications for its cloud. AWS is more focused on “infrastructure as a service” (IaaS), meaning it provides bare-bones basics in its cloud and leaves more work to developers to figure out what to build and how to run it.
In general, PaaS services have higher margins than IaaS services. So whatever AWS reports, Barclays presumes Microsoft’s margins will be the same or higher.
Barclays also says that the end of support for Windows Server 2003, an old product that companies ran in their own data centres, could be a catalyst for them to move to the Azure cloud — just as the end of support for Windows XP spurred a wave of business PC upgrades last year.
Whatever happens with the cloud business, Barclays acknowledges that Windows will have a hard couple of quarters, as it’s competing against that wave of upgrades from last year. For the long-term, a lot depends on whether Windows 10, which comes out this summer, is well-received among businesses, as Windows 8 was not.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.