Microsoft, SAP AG Sign Cloud Deal - Analyst Blog

Microsoft Corp. MSFT and SAP AG SAP recently signed an agreement, according to which the Windows Azure Infrastructure Services will be enriched with SAP's business applications.

Windows Azure is Microsoft's cloud computing platform for building, deploying and managing applications and services through a global network of its managed data centers. Windows Azure core services include Media Services, Mobile Services, Cloud Services, Virtual Machines, Websites and Big Data. It competes with Amazon's AMZN AWS Cloud Computing Platform and OpSource Cloud Computing Services.

According to the agreement, SAP will use Microsoft's cloud computing platform for its business applications, including SAP Business Suite software, SAP Business All-In-One solutions, SAP Mobile Platform and others, beginning in the third quarter.

Reportedly, SAP already offers versions of its applications on Amazon's cloud computing platform, EC2. This agreement strengthens Microsoft's cloud platform and helps it target customers that are interested in using both Microsoft and SAP infrastructure.    

Additionally, Microsoft and SAP announced another strategic initiative yesterday to make SAP applications work better with the cloud version of Microsoft's Office, Office 365, through a new version of the SAP Gateway product. The German software giant also plans to develop mobile applications to support Microsoft's Windows and Windows Phone 8.1.

This partnership is a perfect combination of two giants Microsoft and SAP; thus helping both to leverage each other's resources. The SAP building mobile tools will help SAP customers to build custom mobile apps on their Windows phones, thus expanding the Windows phone platform. Additionally, the mobile integration is also a positive for Microsoft since a lot of corporate workflow is headed in the direction of mobile.

Cloud technology is being increasingly adopted across all businesses to innovate and drive growth. Gartner predicts that around $677.0 billion may be spent on cloud services between 2013 and 2016. The software giant, with its solid portfolio and growing partnerships, should be able to tap this opportunity.

Microsoft remains one of the best positioned software vendors, given its wide range of products, emerging markets strength, continued technology deployment at data centers and growth in cloud computing. The world's largest software maker is optimistic about its cloud business and expects it to be a major growth diver in the near future.

Currently, Microsoft has a Zacks Rank #3 (Hold). Another technology stock worth considering at this time is Micron Technology MU, carrying a Zacks Rank #2 (Buy).

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