Quick: What did you pay last month for your cable, phone, internet, mobile apps or online automobile subscription services? If you flew, what did you pay for that premium boarding, premium seating, premium Wi-Fi/pillow/suitcase status?
If you can answer all of those questions with anything like accuracy, stop reading — you have a firm grip on all the extra costs that are now added to so many purchases.
If not, congratulations! You are well on your way to understanding Microsoft’s new business model.
As Nick Wingfield reports, the software giant posted impressive results on Thursday, mostly related to cloud computing-based products and services. Investors liked what they saw enough to send the stock above its all-time high, recorded in 1999, in after-hours trading.
Here, as elsewhere, things were not exactly what they seemed, in good ways and bad. Adjusting for inflation, Microsoft shares, about $60.60 apiece in after-hours trading Thursday, will have to rise above $85.09 to be worth more than they were at the peak of the internet bubble.
In addition, it’s still hard to say exactly what to make of cloud-computing revenue at Microsoft: Is a customer really paying for access to the kind of advanced hardware and software that is in Microsoft’s cloud, called Azure?
Or is the business buying standard Microsoft software applications, like Office, which are now sold in jazzed-up versions that are sold via Azure, as a subscription? To some, that kind of revenue matters less, since people buy Office anyway — it’s not like Microsoft really did anything new to get this money, the argument runs.