The hottest little secret of Microsoft. A large nu

2022-09-24
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Microsoft's little secret: a large number of cloud computing users only register without using

several insiders told business insider that in recent days, there has been a frightening new word circulating among Microsoft Sales Managers: consumption

consumption, also known as use, refers to the cloud computing resources actually consumed by a customer

there is a disconnect between the number of customers who have registered Microsoft cloud computing services due to the signing of extensive cooperation agreements and the number of customers who actually use these services

insiders said that this disconnect has caused various problems within Microsoft, such as:

in order to compete with Amazon Web services (AWS), Microsoft has been trying to attract enterprises to register for azure. Although they only charge a few extra fees, or even no money, many of them actually do not intend to use this service at all. Microsoft has been counting part of the revenue of such transactions as cloud computing revenue, but if these customers do not really use Microsoft's cloud computing business, these revenue will not be sustainable. The same is true of office365, a cloud based e-mail and productivity Suite (although we heard that office 365 is on the fast track)

Microsoft is putting pressure on the sales team to turn these registered customers into real users. Microsoft has adjusted the salary plans of many sales teams and set consumption goals for them

we heard that some salesmen will leave because of this, or they will not get bonuses because the actual use data is not up to standard. It's a fatal blow for salespeople not to get bonuses. They all rely on bonuses to develop their careers

the sales department is holding various meetings, formulating relevant plans to improve sales and trying to do effect indicators such as imitation leather

after we asked Microsoft about this, the company replied that its cloud computing usage was strong: we found that enterprises of all sizes used Microsoft cloud computing services strongly. All 7. When pressing the up and down keys to adjust the collet position, please do not be higher than the third gear. More than 60% of azure customers use at least one value-added service, such as streaming video. More than 80% of office365 enterprise customers use two or more workloads

push into the cloud

to understand why salespeople feel headache about these newly formulated consumption indicators, it is best to first understand some background information:

in the cloud computing industry, enterprises only need to pay according to the resources actually used, such as computing time, storage space, and the use of value-added applications and services

this mode is very popular with customers, so they have given up the traditional software and computer use mode to obtain computing resources through cloud computing

therefore, all large technology companies are rushing to provide cloud computing services for fear of being ahead of their competitors. They all spare no effort to grab share in this huge market. According to IDC, an American market research company, the size of the cloud computing market will grow from $56.6 billion in 2014 to $127 billion in 2018

as previously reported, Microsoft has been trying to attract a large number of enterprise customers to try the company's cloud computing products through the so-called pilot reuse model in the past few years. The so-called trial and reuse refers to providing cloud computing concessions to enterprises, hoping that they will continue to pay for Microsoft's cloud computing services after using up the preferential amount

but in fact, Microsoft will not directly provide users with free vouchers. A person familiar with the matter said: customers must pay for all services in the enterprise agreement (EA). There is no free product at all. Almost all large enterprise customers of Microsoft will sign such an EA agreement

however, as part of this agreement, Microsoft will provide high discounts for the software part of the agreement. For example, due to the low risk of establishing a recycled plastic granule factory, window will apply these discounts to the cloud computing services covered by the agreement

in fact, there is little change in the total fee charged by the agreement compared with the one without cloud computing services

but this means that Microsoft can implement the agreement 4 Part of the current revenue of the angular type (the transmission shaft of the actuator is perpendicular to the valve stem) is included in the cloud computing revenue. We have reported on this before

this is a smart try and buy strategy, which can help Microsoft import funds into cloud computing business. However, this business also contains risks. If enterprise customers do not continue to use Microsoft's cloud computing business, but stop using it after the coupons are used up, Microsoft will not be able to count them as real cloud computing customers, although from the perspective of financial statements, it seems to have done so

this is actually the true portrayal of some cases

the unbearable little secret of Microsoft is that few customers actually use azure. People familiar with the matter told us last November

another insider recently told us that Microsoft got the money, but customers did not use cloud computing services

people familiar with the matter said that Microsoft would bind tens of thousands of dollars of preferential quota for cloud computing when negotiating a multi million dollar agreement, but in fact, this enterprise customer is not prepared to use azure at all (it has not even certified the security of this service)

the insider said: don't get me wrong. Some customers really like azure and have done a lot with it. However, in some sales areas, less than 20% of enterprise customers contribute 90% of azure usage

the new system is very beneficial for the salesperson who made the 20% deal, but for other salespersons, the situation is a little bad

general situation

another person close to Microsoft said that this problem is not widespread

the insider said that after reading thousands of EA agreements and azure agreements, he found that only a small part of them contained azure preferential lines that enterprises did not want or did not use

when talking about the discount, the insider admitted that the discount method described above would also be applied to other products so that Microsoft could count in azure's revenue, but he believed that this problem was not common

we don't discount azure. We discount other products in order to generate revenue for azure included in EA. But the proportion of this situation is very low. The insider explained

he said that Microsoft would not lose money on these contracts

in fact, customers will pay for things they don't use (Azure). The azure agreement lasts for one year, so if this is included in their EA agreement, they will have one year to use this service. If they don't use it, although they pay for it, they can't enjoy the value brought by this service

the insider also confirmed: Yes, we will ask the salesperson to attract customers to use azure, because this is the real channel for us to charge azure fees

however, other salesmen told us that this mode of binding azure is actually very common

Cynthia Farren, a software licensing consultant, also confirmed this situation when we reported this in November last year

she said to us at that time: I also heard some Microsoft salespersons say that all EA agreements they are responsible for will come with some cloud computing services, but not all customers use these services

the key for Wall Street to question the problem is that some insiders began to notice this situation and asked Microsoft to disclose more details

when Microsoft CEO satyanadella said in January this year that the company's cloud computing business would become a business with an annual revenue of $5.5 billion, many industry experts called on it to disclose more details

what I really want to know is the actual total number of active users. I hope they can disclose these data in a more transparent way (such as active users, etc.) Fallon told us before

the same is true of Wall Street analysts

at the Microsoft earnings conference in January this year, Citigroup analyst Walter Pritchard asked NADELLA and Microsoft CFO amyhood about the actual number of users of office 365. Insiders told us that the number of enterprise users of this service is increasing rapidly

can you talk about the deployment rate? I know you have a lot of contracts, but how many users actually use this service, e-mail, SharePoint and other cloud computing services? Pritchard asked at the time

Microsoft Management avoided this problem at that time. Hood did not disclose the number of active users, but said: the actual goal is to show users cloud computing services, and then let them switch to such services as soon as possible

pressure increases

obviously, Microsoft is now putting pressure on salespeople to ensure that users actually use this service

the fundamental challenge is that Microsoft encourages the sales team to sell office365 and azure on a large scale, regardless of whether customers need, want, or even plan to use these services. A person familiar with the matter told us

insiders said that in the past, the sales bonus was only linked to the number of customers who agreed to increase cloud computing services in the contract. Now, Microsoft has begun to list consumption as the evaluation index for salespeople and sales managers. Even signed contracts will also use this index

the new salary is bad for salespeople, because the customers they sign up for do not consume cloud computing services. Many regions will conduct a monthly or biweekly consumer business assessment to encourage salespeople to complete their tasks. People familiar with the matter said

the insider's so-called task completion refers to letting customers use all cloud computing services they pay for, and more

while some salespeople are worried that they can't let customers really use Microsoft's cloud computing services, Amazon and Google began to recruit cloud computing talents from Microsoft frantically

people familiar with the matter said that Microsoft encountered a massive poaching by Google's Amazon at an inappropriate time, resulting in a serious brain drain

industry consensus

in fact, other enterprises are also trying to change their ideas, no longer simply attract users, but begin to pay attention to the actual use of cloud computing

catihe Lesjak, HP CFO, admitted in January this year that the company is also carrying out such projects

according to the latest financial report released by HP at the end of February, the company's software revenue fell 5% year-on-year last year. We will continue to shift our product portfolio and operation model to SAAS and subscription services. The adjustment of customers' consumption behavior and sales motivation will also have an impact on short-term revenue. She admitted

at the same time, marcbenioff, CEO of salesforce, known as the king of cloud computing, also trumpeted how users use the company's cloud computing services when the company announced its financial results at the end of February. Salesforce is one of Microsoft's biggest competitors in cloud computing

we handled 177billion transactions for our customers in this quarter, an increase of 68% year-on-year. You can see that our usage rate is soaring. Customers use us

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