Microsoft Showers Love on its Corporate Businesses

Steve Ballmer’s surprise retirement announcement in August highlighted Microsoft’s struggles in high-profile consumer businesses such as smartphones, tablet computers and Web search. But nearly 60% of the company’s revenue – and a higher percentage of its profit – comes from software sold to companies, including largely invisible technologies that power computer servers, let cubicle dwellers access work email on their iPhones and crunch data from customer lists.vacuum bottleMonday,carbon cloth Microsoft announced plans to release new versions of several of these software products. Microsoft also opened a new potential customer base by creating a version of its Azure “cloud” computing service for government organizations.In an event in San Francisco, Microsoft Executive Vice President Satya Nadella highlighted the breadth of Microsoft’s software for businesses and touted their potential amid competition from both big rivals such as Oracle and VMWare, as well as from startups.“The thing that I’m most excited about…is the big growth in our enterprise business,” said Nadella, who oversees engineering of many of Microsoft’s software products for corporations.Revenue at Microsoft’s “commercial” unit grew 8.6% in the fiscal year ended June 30, while revenue in its “devices and consumer” unit fell, compared with a year earlier.Nadella is viewed as a rising star inside of Microsoft and a potential future CEO, although perhaps not to replace Ballmer immediately. Nadella demurred Monday when asked about the CEO post, saying he likes to his current job.Some Microsoft investors complain that Microsoft should focus more on its enterprise businesses, and less on unprofitable or marginally profitable consumer-oriented businesses such as Web-search engine Bing, the Xbox videogame system and video-calling service Skype. 

Those investor gripes grew a little louder after Microsoft announced it will spend $7 billion to buy Nokia’s mobile phone business — another largely consumer business with lower profit margins than Microsoft’s historic norms.In a shareholder letter Monday, Ballmer said the company’s software products for corporations “continue to be an area of great strength, growth and opportunity.” In a fuller explanation of Microsoft’s consumer strategy than he has offered previously, Ballmer wrote that Bing, Skype and other consumer services will “serve as an on-ramp to our enterprise services while generating some revenue from subscriptions and advertising.”The software offering for which Microsoft announced new versions Monday include Windows Server for the powerful computers that run the technology backbones of companies; a “virtualization” software called Hyper-V,Antique faucets which magnifies the power of back-end computers; and refreshed software tools called Visual Studio to help developers write new applications for businesses.Microsoft’s new Azure for governments could open a new area of growth for the company. Governments are responsible for about 10%, or about $100 billion, of the $1 trillion spent in the U.garage equipmentsS. on information technology, according to market researcher Gartner.contemporary lighting But security concerns have deterred many government agencies from using shared data centers referred to as the “cloud.”