Microsoft is going to start talking about how much money its cloud business actually makes
Notably, the first new metric is commercial cloud gross margin percentage, which tracks the gross margin on its business-focused cloud products, including Microsoft Azure, Office 365, and Dynamics.
This is a big concession towards Microsoft's investors, notably former CEO Steve Ballmer, who have been calling for more transparency from the company when it comes to its cloud computing revenues - especially given that current Microsoft CEO Satya Nadella has pegged so much of the company's future on strong cloud growth.
Previously, Microsoft had sort of cherry picked cloud numbers, disclosing different information about users, usage, revenue or margins for some cloud services but not for others.
Still, while revealing gross margins is a step in the right direction, Ballmer's real push was for the company to reveal actual cloud revenues, to better help investors judge progress. It looks like he'll have to wait a little while longer.
The other two new metrics Microsoft will now provide are also interesting in their own right:
- Gaming revenue: Microsoft has been slowly rethinking its video game business, from a series of products into a cross-platform service between Windows 10 and the Xbox console. While Microsoft no longer discloses sales of the Xbox One, which significantly lags the leading Sony PlayStation 4, it will now share the total revenue from its gaming business, including console sales, game sales, accessories, and the Xbox Live subscription service.
- Windows Commercial products and cloud services revenue growth: This merely tracks how much more revenue Microsoft has generated from sales of Windows, Windows Server, and related tools to businesses this year than the year before. It replaces the previous "Windows volume licensing revenue growth y/y" metric.
On all counts, Microsoft is showing how much things are changing at the company: Instead of tracking how much money they're making from any one product, Microsoft's accountants are now looking at the recurring revenue that comes when you shift from boxed software into internet-delivered subscriptions. It's yet another sign of the new ways Microsoft does business.
In case you were wondering, here are all 20 metrics Microsoft shares with investors, per an updated slide deck uploaded today:
