Bekker's Blog

Blog archive

Microsoft Reports Growth in MCS

If you think of Microsoft partners as organizations that consult on and implement Microsoft technology solutions, one of the largest organizations in the channel is Microsoft's own Enterprise Services arm, which includes Microsoft Consulting Services (MCS).

Microsoft generally keeps communications vague about Enterprise Services and MCS, due to the sensitive nature of its occasionally testy relationship with enterprise and federal government partners. Still, the company releases some broad outlines of the group's performance in every financial report, and last week's release was no exception.

"Enterprise Services revenue grew 5 percent, and 3 percent in constant currency, as growth in Premier Support Services and Microsoft Consulting Services was partially offset by declines in custom support agreements for Windows Server 2003," said Microsoft CFO Amy Hood during the call with financial analysts.

Details in Microsoft's 10-Q filing (.DOC) with the U.S. Securities and Exchange Commission indicated that the 5 percent amounted to $64 million, suggesting overall Enterprise Services revenues for the quarter were in the neighborhood of $1.3 billion.

What that tells us about actual MCS revenue is a little, but not a lot. We can infer that MCS revenues may be increasing at better than 5 percent to offset the custom support contracts. Meanwhile, it's hard to know how big a chunk of Enterprise Services revenues comes from MCS. Premier Support Services is a big business, and even a declining custom support agreement business is accounting for part of the revenue.

Looking ahead to Q3, Hood told analysts to expect a similar revenue growth rate for all of Enterprise Services in Q3 compared to Q2, with growth in Premier Support offsetting the Windows 2003 custom support agreement decline, and no mention of MCS as a major factor either up or down.

Microsoft's services are generally focused at the highest end, with the company claiming 75 percent of its engagements are with the Fortune 1000, and Microsoft often acts as a prime contractor, pulling partners into deals in various roles.

What are you seeing out there? Is MCS being more or less aggressive in competing with you for customer deals than you've seen in the past? Let me know at [email protected].

Posted by Scott Bekker on February 08, 2018


Featured

  • World Map Image

    Microsoft Taps Nebius in $17B AI Infrastructure Deal To Alleviate Cloud Strain

    Microsoft has signed a five-year, $17.4 billion agreement with Amsterdam-based Nebius Group to expand its AI computing capabilities through third-party GPU infrastructure.

  • Microsoft Brings Copilot AI Into Viva Engage

    Microsoft 365 Copilot in Viva Engage is now generally available, extending Copilot's AI-powered assistant capabilities deeper into the Viva platform.

  • MIT Finds Only 1 in 20 AI Investments Translate into ROI

    Despite pouring billions into generative AI technologies, 95 percent of businesses have yet to see any measurable return on investment.

  • Report: Cost, Sustainability Drive DaaS Adoption Beyond Remote Work

    Gartner's 2025 Magic Quadrant for Desktop as a Service reveals that while secure remote access remains a key driver of DaaS adoption, a growing number of deployments now focus on broader efficiency goals.