Microsoft (NASDAQ: MSFT) is a $ 2 trillion market cap company, but it’s showing no signs of slowing down any time soon. Revenue continues to grow at an astonishing rate for a company of this size, and it continues to innovate. Recently, the software giant announced a brand new version of its dominant PC operating system. On a fool live episode recorded June 16, Fool contributors Toby Bordelon and Brian Withers discuss the upcoming Windows 11 and the potential it has to boost Microsoft’s revenue even further.
Toby Bordelon: Well, speaking of cash, let’s move on to a company that has a lot of it and does a lot of it, Microsoft. What I want to talk about here is something very interesting that has happened in the last couple of weeks. Some news of a new version of Windows. Not just an update on Windows 10 – what we’ve seen over the last few years is that there are two big updates every year on Windows 10. But it looks like a whole new version of Windows. , and there are signs that suggest that we are actually going to have something called Windows 11. We weren’t expecting this. Microsoft has made previous comments suggesting that Windows 10 was going to be the last version of Windows, and it would only be updates from there. It is really interesting to see. We don’t really have a lot of information yet on how it’s going to be marketed, how it’s going to be sold. If I had to guess I think they are going to do what they did with Windows 10 i.e. it will be a free update for users then maybe a license fee for PC and business if you buy a new computer it will be part of the cost, that sort of thing.
But a very interesting possibility that I’m wondering if we’re going to get to this is if we’re finally going to see Windows as a consumer subscription, or at least some Windows features. Can be integrated with Office 365, which is their Office subscription suite, both for businesses and consumers. It will be really interesting. They have followed this path in many of their departments. Office – available as a subscription, Xbox – available as a subscription, both for the online version, Xbox Live Gold, and Xbox Game Pass, which gives you access to the games. Will we see this with Windows? I don’t know, but it will be interesting if they take that final leap into subscription services for Microsoft. We have screenshots that are available on the web. You can take a look. It looks more modern, sleeker from what we’ve seen, but nothing official yet. There is an upcoming Windows event on June 24. Hopefully all of our questions will be answered then, but we’ll see. Interesting news here.
Brian Withers: Yes. It’s really cool, Toby, to go back to their 11th version of their original business that started the business, it’s pretty exciting. When I look at Microsoft, it’s one of the trillion dollar darlings, and when we took a deep dive, I was really surprised that Microsoft’s addressable market is in the trillions of dollars. Even as large as Microsoft is, the market they target is significantly larger. What are Mr. Softy’s main growth drivers that investors should watch out for?
Bordeaux: Well I think the big issue you need to look at is cloud computing and Azure in particular. You look at the last quarter, server and cloud products grew 26% year-over-year, Azure grew 50%. Which is amazing. This is really what drives [the business] right now, the cloud, and that’s why I think maybe you could see some of that trying to move Windows into a subscription and integrate it into the cloud, integrate it in some way or another. other in the cloud offering with perhaps premium options in the operating system. Microsoft’s overall revenue grew 90% in the last quarter, and again a $ 2 trillion company gave us 90% year-over-year revenue growth. Difficult to find a problem with that. Every part of their business seems to be doing well right now, so it’s a fantastic business, and as big as it is, I think there are still opportunities here.
Withers: It’s just mind-blowing. That’s great, Toby, thanks for the update.
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