Microsoft on course for $6.3 billion run rate for commercial cloud services implying 90 million Office 365 mailboxes

Microsoft on course for $6.3 billion run rate for commercial cloud services implying 90 million Office 365 mailboxes

In February, Microsoft estimated that the annual run rate for commercial cloud products was on course to achieve an annual run rate of $5.5 billion by the end of their FY15 fiscal year in June. Today, Microsoft upped that estimate when they released their Q3 FY15 results to say that:

"Commercial cloud revenue grew 106% (up 111% in constant currency) driven by Office 365, Azure and Dynamics CRM Online, and is now on an annualized revenue run rate of $6.3 billion."

In other words, Microsoft sees an extra $0.8 billion of revenue run rate being achieved by the end of June.

Microsoft doesn't provide a breakout of how Azure, Dynamics CRM, and Office 365 contribute to the $6.3 billion target. I've been following the numbers for the past few years in an attempt to interpret them in terms of the number of paid Office 365 business subscribers (according to Microsoft, there are 12.4 million Office 365 consumer subscribers). The last time I looked at the numbers, I figured that roughly $4 billion might be attributed to Office 365 and that this meant that nearly 80 million mailboxes used the service, including low-cost and free subscriptions.

Given the new data, that number is likely to be north of 90 million by the end of June, 55 million of which use fully-paid enterprise plans. That is, if Microsoft achieves their targets. Given the growth in revenue and the obvious interest that exists in Office 365, there's no reason that they will not make the goal.

In terms of the total installed base for Exchange (cloud and on-premises), 90 million is roughly 28% of the total Exchange seats. I calculate this number based on data drawn from different sources such as the Radicati Group. Of course, Microsoft doesn't publish details of the size of the Exchange installed base either.

Of course, all of this is conjecture and Microsoft is not saying anything to anyone about the numbers of mailboxes that are deployed inside Office 365. Maybe they'll provide some more data at Ignite – or maybe they will simply leave the deployment of new Office 365 datacenters in places like Austria, Finland, Australia, and India to speak for itself.

Follow Tony @12Knocksinna

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