Steady success over a long period stops becoming a news story. That's what has happened to Microsoft (MSFT) since Satya Nadella took over as chief executive in early 2014.
Before Nadella took the top job from Steve Ballmer, the company careened from disaster to disaster. There was the ahead-of-its-time Windows 8, buying Nokia's (NOK) phone division for $7 billion and then giving up on phones, and allowing Android (GOOGL) to become an operating-system challenger to Windows.
Now, Microsoft has been so steady that people hardly notice that the Redmond, Wash., company's market cap has grown to $2 trillion-plus.
Unlike Amazon (AMZN), Nadella's company manages to invest heavily in its future while also showing steady profit. That means its successes often get ignored -- or at least not celebrated -- making something like its Dynamics 365 segment fly a bit under the radar.
Image source: Microsoft.
What Is Microsoft's Dynamics 365?
Microsoft describes Dynamics 365 as "how you become more agile to delight your customers. With Dynamics 365, you’ll have the only portfolio of intelligent business applications that empowers everyone to deliver operational excellence and create more engaging customer experiences."
That's marketing gobbledygook to say that Dynamics 365 offers a suite of ready-made enterprise software solutions to help companies manage their businesses and customer relationships. During the second-quarter earnings call Nadella explained how the product has been used by some massive brands.
"To counter demand shocks and supply constraints in this economy, every business will need to become a hyperconnected business, unifying data, process, and teams across the organization," he said.
"Across Dynamics 365, we continue to take share, as companies turn to our expanding portfolio of business applications to address these and other challenges."
That's as close as Nadella gets to bragging during an earnings call, but he's clearly excited about what his company has accomplished.
"With Dynamics 365 Connected Spaces, we are creating a new software category to help organizations manage physical operations across diverse industries, from real estate to retail, to factories, and construction," he added.
How Is Microsoft Helping?
"Companies like Chipotle (CMG) and Home Depot (HD) are relying on our new Customer Experience Platform to take control of their data, connecting customer touchpoints to deliver more personalized experiences," Nadella said.
"Daimler Trucks North America is using Dynamics 365 Supply Chain Insights to preempt supply chain issues."
Basically, while Dynamics 365 is not a direct equivalent to Amazon (AMZN) Web Services, it's a cloud-based collection of software and services that competes in the same space. (Microsoft's overall AWS equivalent is its Azure cloud offering.)
Nadella has a very bullish outlook on the services Microsoft has rolled out as part of Dynamics 365.
"We announced a new 'logistics as a service' offering with FedEx, (FDX) combining data and insights from the company’s network with Dynamics 365 to help brands better fulfill, ship, and service customer orders," he said.
He also made it clear that the product offering will continue to evolve.
"Up the stack, I would say. Dynamics, Dynamics 365 Connected Spaces, that’s a solution that’s in preview today. That’s about really being able to take a retail space or a connected factory or a building and essentially create a complete new software category, which is about managing physical processes.
"Just like CRM and ERP and supply chain management, we now have a suite which is all driven by Connected Spaces, which is going to automate physical processes," Nadella added.
Dynamics revenue grew 29% year-over-year driven by Dynamics 365, which grew by 45%, the company said in its earnings release.
