Amazon, Microsoft war brewing as both companies eye cloud computing

Amazon and Microsoft might soon be in a "street battle" as both companies eye cloud computing as the next best thing. Amazon Web Services is currently the leading player, but people at Wall Street think this will soon change, thanks to Microsoft's Azure.

FBR Capital Markets published a note on Tuesday, suggesting that Microsoft's cloud computing venture, Azure, will likely take off next year. The firm estimates that it will achieve an annual run-rate trajectory of more than US$8 billion (AU$11.04) in the coming year. This is almost the rate of the AWS for 2015.

"We continue to believe 2016 will be a '206 area code street battle for the cloud,' with Microsoft firmly best positioned as the vendor to compete with AWS on the enterprise cloud front for years to come," the company said in its note via Business Insider.

"We believe Microsoft and Azure have a long runway to cross-sell into their massive enterprise customer bases with a broad platform of cloud offerings for the next few years," the company added.

“We believe its best cloud days are ahead given our positive checks from the field around solid uptake of key cloud products (e.g., Office 365, Azure) heading into 2016."

The firm added that the decision to invest more in cloud under CEO Satya Nadella's leadership is doing the company well. In fact, many analysts have also praised Microsoft's 2015 moves as the company appears to be getting back on track. According to CNBC, Microsoft's Azure is one of the fastest-growing areas for the company.

It already posted a revenue increase of 8 percent amounting to US$5.9 billion (AU$8.14) for the quarter that concluded on Sep.30. Goldman Sachs added in its note that the company has been successful in transitioning the Office-installed base to Office 365. It now ranks second to Amazon Web Service. Azure also showed strong capital allocation along with operating expense discipline.

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