This article is based on reporting originally published at The Motley Fool (fool.com) in 2019. Financial figures and market share data reflect conditions as of mid-2019 and are presented here for historical context.
From Third Place to Serious Contender
Just a few years before this article was originally written, Microsoft (NASDAQ: MSFT) was widely considered a distant third-place player in the cloud computing market. Amazon Web Services (AWS) dominated the space, and Alphabet’s Google Cloud occupied a scrappy second-place position. Microsoft’s cloud ambitions were treated skeptically by analysts and investors alike.
By mid-2019, that picture had changed substantially. Amazon remained the clear market leader, but Microsoft had firmly claimed the number-two position globally and was growing faster than any of its major rivals in key segments. The turnaround offers a useful case study in how a legacy software company can successfully pivot to cloud-first infrastructure and services.
The Cloud Market Context (2019 Figures)
According to market research firm Gartner, the worldwide public cloud services market was forecast to reach $214.3 billion in 2019, representing 17.5% growth over the $182.4 billion recorded the prior year. Within that market, cloud system infrastructure services — the segment where AWS and Azure compete most directly — was projected to grow 27.5% in 2019, reaching $38.9 billion.
These are significant tailwinds for any provider operating at scale. Enterprise adoption of cloud infrastructure was accelerating as organizations moved workloads off on-premises hardware for reasons of cost, scalability, and operational agility.
Azure’s Growth Rate and Market Share
As of mid-2019, Amazon held approximately 31.5% market share in cloud infrastructure services. Microsoft did not publicly disclose standalone Azure revenue figures at the time — a practice that frustrated some analysts — but reported growth metrics told a compelling story. Azure’s infrastructure segment grew 63.6% year-over-year during Q2 2019, outpacing all major competitors in percentage terms.
Total cloud revenue for Microsoft’s fiscal fourth quarter (ended June 30, 2019) was $33.7 billion, up 12% year-over-year. Commercial cloud revenue specifically grew 39% year-over-year to $11 billion in that same quarter — described at the time as the strongest three-month period on record for that segment of the business.
Office 365 Commercial was a major contributor, with revenue up 31% year-over-year, demonstrating that Microsoft’s cloud story was not limited to raw infrastructure but extended across productivity and collaboration software as well.
The Satya Nadella Effect: A Cloud-First Strategic Pivot
Microsoft’s cloud transformation is closely linked to the leadership of CEO Satya Nadella, who took the helm in February 2014. Prior to Nadella, Microsoft’s culture was heavily oriented around its Windows and Office franchises — perpetual-license, on-premises software products. Nadella shifted the company’s mission toward cloud and mobile, investing heavily in Azure infrastructure, developer tooling, and hybrid cloud capabilities.
This wasn’t a superficial rebranding exercise. Microsoft poured billions of dollars into data center expansion, research and development, and strategic acquisitions. The result was a platform capable of competing across multiple cloud service categories: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). Few vendors could credibly claim leadership positions across all three, and that breadth allowed Microsoft to generate recurring revenue from both enterprise and consumer customers simultaneously.
Bundling Strategy: Azure Plus Office as a Competitive Lever
One of Microsoft’s more effective competitive moves was bundling Azure with its Office product suite. Rather than competing with AWS purely on infrastructure pricing and features, Microsoft offered enterprise customers a compelling combined value proposition: migrate your workloads to Azure, and your workforce already has access to Microsoft 365 productivity and collaboration tools.
This strategy showed tangible results. In July 2019, Microsoft announced a $2 billion deal with AT&T (NYSE: T) to move the majority of the telecom provider’s non-network workloads to the public cloud by 2024. The deal also included AT&T’s workforce adopting Microsoft 365 tools — a clear example of the bundle strategy working at enterprise scale.
Ecosystem and Partnership Expansion
Beyond its own product portfolio, Microsoft was actively building a partner ecosystem to round out Azure’s capabilities. Partnerships with Oracle, Adobe, Dell Technologies, and SAP, among others, helped Microsoft address enterprise requirements that its own platform might not fully cover — and made Azure a more attractive destination for large organizations with complex, heterogeneous IT environments.
These partnerships also served a strategic purpose: by working with vendors that enterprises already rely on, Microsoft reduced the friction of cloud migration and positioned Azure as an integration-friendly platform rather than a closed ecosystem.
What This Means for DevOps and Engineering Teams
For DevOps practitioners and engineering leaders, Microsoft’s cloud trajectory in this period had several practical implications:
- Broader toolchain integration: Azure’s growth meant deeper native integration with GitHub (acquired by Microsoft in 2018), Azure DevOps pipelines, and Visual Studio Code — tools many engineering teams already used.
- Hybrid cloud investment: Microsoft’s Azure Arc and hybrid cloud capabilities expanded, reflecting enterprise demand for workloads that span on-premises and cloud environments.
- Enterprise deal momentum: Large-scale enterprise contracts (like the AT&T deal) signaled Azure’s increasing readiness for mission-critical workloads, which influenced procurement decisions at competing organizations.
- Competitive pricing pressure on AWS: Microsoft’s aggressive growth in market share created pricing and feature competition that benefited cloud customers across the board.
Analyst Outlook at the Time
Wedbush Securities analyst Dan Ives, cited in the original Motley Fool reporting, noted an acceleration of large enterprise cloud deals during Q2 2019 in both the United States and Europe, with Microsoft positioned to win a significant share of them. Wedbush projected that cloud would account for roughly 55% of enterprise workloads by 2022, up from approximately 30% at the time of writing — a forecast that, if accurate, represented substantial runway for continued Azure growth.
Some analysts went as far as predicting Microsoft would eventually surpass Amazon to claim the top position in cloud infrastructure — a view that remained contested but reflected the pace of Azure’s gains.
Historical Perspective
This article was originally written in September 2019. The cloud computing landscape has evolved significantly since then — Azure, AWS, and Google Cloud have all continued to grow, and market share dynamics have shifted. Readers should treat the specific figures cited here (market share percentages, revenue numbers, analyst forecasts) as historical data points rather than current benchmarks. For current market analysis, consult up-to-date research from Gartner, IDC, or Synergy Research Group.
Original reporting by Donna Fuscaldo via The Motley Fool. Disclosure information from the original article: The Motley Fool owned shares of and recommended Alphabet, Amazon, and Microsoft at the time of publication. Donna Fuscaldo held no position in any of the stocks mentioned.