Microsoft's Cloud Bets Pay Off As Office 365 Sees Big Growth

Office is a big deal right now. Consumers are flocking to the Office 365 cloud service, with 15 million subscribers and nearly a million more signing up every month. For businesses, Microsoft is seeing 50,000 new small and medium-size companies signing up every month. And that's not all. Right now, Office 365 is in use at 4 out of 5 Fortune 500 corporations.

The news, which CEO Satya Nadella mentioned in Tuesday's Q4 2015 earnings call, is a good sign for Microsoft, which is seeking to transition the Windows platform to a service model with the launch of Windows 10. The operating system will feature a range of cloud-based services at its core, such as OneDrive and Groove Music. Overall commercial cloud revenue, a key battleground for Microsoft, is up 88 percent and is now on an annualized revenue run rate of $8 billion.

Office Mobile also has been a success for Microsoft. The iOS and Android versions of the productivity suite have been downloaded 150 million times, despite having launched just over a year ago. The suite moved in November from requiring Office 365 to function, to providing a range of basic viewing and editing tools for free. Customers looking for more advanced functionality need to subscribe to Office 365.

Microsoft is currently gearing up to release Office 2016 for Windows, following a Mac launch and the release of a universal app version ahead of Windows 10. The Mac version is currently exclusive to Office 365 customers.

The cloud is a crucial part of Microsoft's future, and the success of Office 365 will be a crucial part of that. "Businesses moving to the cloud will find it extremely hard to migrate away from it, creating an exceptionally sticky business fueled by ongoing subscription revenues," said David Lavenda, VP of product strategy for harmon.ie. "And with Office Graph, which promises to deliver business intelligence from the cloud, Microsoft is likely to be the first to a new smart cloud offering, which will further drive growth."