Azure, Office 365 Bright Spots For Partners Amid Microsoft Gloom

Office 365 and Azure, two of Microsoft 's key cloud solutions, have been bright spots compared to the company's gloomy earnings report Thursday, which included a $900 million charge for its Surface RT tablet.

"I won't quote exact growth numbers, but it's growing very rapidly," said SADA Systems CEO Tony Safoian of his company's Microsoft cloud business. SADA Systems, based in Los Angeles, Calif., is a Microsoft partner and information technology consulting firm specializing in Office 365 deployment, migration and implementation services.

[Related: Microsoft Takes $900M Charge On Surface RT 'Inventory Adjustments' ]

SADA's cloud business as a whole has also been growing, more than 60 percent annually for the past five to six years, Safoian said. "And there is massive work to be done," he said, referring to the applications that businesses could move to the cloud.

Customers moving to the cloud has only recently gained momentum, he said. Businesses often start with Microsoft Office 365, which includes cloud based versions of Word, Excel, PowerPoint, Exchange, Lync and other apps.

There are still a lot of applications that need a home besides 365, Safoian said. "Azure can be that home," he said of the public cloud platform that can host the applications not yet being developed in the cloud or hosted there.

More than half of Fortune 500 companies are using Windows Azure, Microsoft CFO Amy Hood said Thursday during the company's fourth-quarter earnings call. The platform is now growing at an annual rate of $1 billion, based on the company's figures.

In addition, large businesses trying to make the leap to the cloud are choosing Office 365, which is now on a $1.5 billion revenue run rate, Hood said.

About a quarter -- or roughly 150,000 -- of Microsoft's 650,000 partners are enrolled in Microsoft cloud services, according to the company's figures. But more than 50,000 partners now use Office 365 to run their businesses, more than two times as many as a year ago, according to Microsoft.

Indeed, Office 365 and Azure provided a bright contrast to the performance of other Microsoft products, particularly the Surface RT tablet.

"We are very happy with Azure," said Chris Pyle of Champions Solutions Group, a solution provider in Boca Raton, Fla., that develops and runs Microsoft 365 Command on Azure.

Pyle said his company's Microsoft cloud business has increased 175 percent this year.

"I am also pleased with the Azure Circle partner program that has been rolled out a few months ago," he said. The program helps partners move clients to the cloud with training and demonstrations of Azure tools, opening up business opportunities for the partners.

"Our pipeline is growing," Pyle said.

PUBLISHED JULY 22, 2013