Email Gets Customers Hooked on Cloud – at Least in Microsoft’s Case

While not a major talking point in Microsoft’s fiscal second-quarter earnings report and conference call last week, email services seem to be one of the major drivers of cloud services for the company.

In the report, server products and cloud services revenue grew 10 percent, at least partially due to customers already relying on Microsoft as their email provider.

As Reuters’ Sarah McBride wrote, “For companies already relying on Microsoft Exchange and Outlook for sending and receiving email, information technology managers say, turning to the same company to handle that data in the cloud seems like a logical move.” Examples include the University of Wisconsin, Madison, whose transition to cloud services started with email and continued to Office 365 because of its existing investment.

Outlook has enormous traction. Some 30 million iOS and Android active devices run it, paving the way for Exchange email.

Being able to provide different services provides natural avenues for customers to expand the extent of their services. “If you’re an Office 365 customer, you have data in Office 365, you want to build applications that tap into that data, then you use Azure,” Microsoft CEO and director Satya Nadella said in the conference call Thursday. “If you deploy Exchange online, you have Azure AD and then the natural expansion from there is the full EMS suite with device management for all your mobile devices and also Advance Threat Protection and what have you.”

Microsoft’s revenue for its public cloud, Azure, grew 140 percent in the quarter according to Nadella, and that these customers were likely to have already been a consumer of the Microsoft ecosystem. He said, “Azure customers who also purchase Office 365 consume eight times more Azure than other customers. More than 70 percent of the Fortune 500 have at least two different Microsoft cloud offerings.”

Get customers signed up for one cloud service, and others are bound to follow.