In recent years, cloud computing giants are at loggerheads to disrupt the cybersecurity market with their out-of-the-box offerings, software marketing deals, and acquisitions. Microsoft has been the industry pioneer in this segment by offering multiple products at discounted deals to organizations across the globe.
Recently, Microsoft remarked that its security business brings in about $15 billion in annual revenue which is expected to grow at an astounding 40 percent every year. Presently, Microsoft bundles products at its Office 365 Platform and Azure cloud computing business. The success of Microsoft is evident from the fact that its stock retreated 24 percent in 2022 despite the bear market in technology companies.
William Blair analyst Jonathan Ho recently remarked that Microsoft has successfully managed to overcome its reputation for poor security associated with hacking attacks targeted at its Windows operating systems and web browsers.
"Historically, Microsoft was not viewed as being very good at security with the data breaches. Its products weren't trusted by cybersecurity," Ho said in an interview. "All that has changed. Microsoft has developed strong cloud-native products. It scores very well with Gartner and third-party evaluation platforms. And, the Microsoft product suite is very strong, enabling it to bundle products for customers."
In recent times, computer security has remained one of the biggest categories on the AWS Marketplace, an online store for independent sellers. Microsoft got a leg up on AWS when it was able to hire longtime Amazon cloud executive Charlie Bell to head its cybersecurity business. Bell plans to leverage artificial intelligence tools to significantly improve cybersecurity against ransomware attacks and other hacker tools.
Since 2014, Microsoft has acquired startups Aorato, Adallom, Hexadite, and CyberX to speed up its push into cybersecurity. It also acquired RiskIQ, a security threat management company in July 2021 and CloudKnox Security in 2021.
"Microsoft is creating an integrated, end-to-end security platform," he said in a recent note to clients, "said BMO Capital Markets' analyst Keith Bachman. Management commented that its $20 billion investment in security over the next five years reflects this commitment and will result in MSFT improving in a number of different security areas."
He added: "Further, management commented that they see a clear path to driving revenue and margins with this security investment. MSFT's plans involve a greater focus on integration and under Charlie Bell's leadership, all security engineering teams have been brought together to work more across products. Our take is that Microsoft's historical security products and go-to-market have not been well integrated nor well organized, so the organizational consolidation should help."
"At the core of Microsoft's staggering security momentum is its bundling strategy," MoffettNathanson analyst Sterling Auty said in a recent report to clients. "In the same way that Microsoft was able to rapidly grow its Teams collaboration app by bundling it into Microsoft 365 agreements, Microsoft has been gradually adding security products to its premium Microsoft 365 subscriptions."
"If Microsoft broke out the segment as a stand-alone company, we believe it would be the largest individual security company, and identity is the cornerstone of the firm's revenue," Auty went on to say. "Over the years, Microsoft has leveraged its prominence in the enterprise directory space, where companies manage user information, and built a leading identity business. However, many of Microsoft's solutions touch other key areas of security including endpoint, data, cloud, and even network."
Find out how you can leverage Microsoft products to enhance the security of your organization by calling or emailing us at C.I.G Consultants.