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Microsoft Inspire: Explaining That $4.5 Trillion Opportunity

Ever since last July, Microsoft has been bandying about the number $4.5 trillion.

Microsoft got that sky-high figure from analysts at IDC. Supposedly it's the size of the digital transformation market opportunity by 2023.

Microsoft Channel Chief Gavriella Schuster touted the figure at Microsoft Inspire, a year ago in Washington, D.C., and it's been a staple of Microsoft partner presentations since.

Editor's Note: Microsoft has prohibited press and analysts from attending Inspire this year, marking the first time since 2005 that RCP won't have a presence at Microsoft's annual partner conference. If you see or hear something newsworthy at the show, shoot us a tip at [email protected].

Kicking off Inspire 2018 on Monday in Las Vegas, Schuster trotted the number out again, but basically admitted that she wasn't originally totally sold on a figure that would represent more than 5 percent of global GDP.

Of course, to be able to acknowledge earlier doubts, she now has to say she is sold on the math. So in the course of repeating the $4.5 trillion stat on Monday, Schuster said, "A few weeks ago, I started to do a little math, and I realized that maybe this number was not quite as crazy as it sounded to me last year."

The first part of Schuster's math involves Wall Street estimates that Microsoft revenues will hit $100 billion for fiscal year 2018, which ended June 30 and will be formally reported on Thursday. Schuster made a point of clarifying that her estimate did not represent advance intel from Microsoft CFO Amy Hood. It doesn't take a data scientist to say $100 billion would be in the ballpark for FY 2018 revenues; Microsoft reached north of $90 billion in the previous fiscal year. Low double-digit growth would easily clear $100 billion this time.

The next part of Schuster's math involves another IDC figure -- that for every $1 of Microsoft revenue, partners rake in $9.64 in services revenue.

"So if you just do that simple math, that's $9.64 times $100 billion is nearly a trillion dollars just this past fiscal year of Microsoft services," Schuster said. "You add to that a predicted continued double-digit growth in cloud this coming year, and the fact that we're not just attaching to 1 or 2 billion PCs around the world but to over 10 billion IoT devices and climbing, and that makes the $4.5 trillion of total addressable market in five years feel addressable."

In general, it was a relatively slow first day for Inspire when it came to news. The company made a score of Inspire-related partner and news announcements last week in advance of the conference. Those included the Azure Expert Managed Service Provider program, new competency-related advanced specializations, expanded core benefits for partners, new business development materials, as well as several Azure and Microsoft 365 announcements. See our Inspire preview for details.

Schuster is scheduled to return to the main stage on Tuesday morning with a keynote about the company's plans for partners, and she will be followed by executives detailing Azure, Microsoft 365 and business application opportunities. CEO Satya Nadella will take the stage on Wednesday to give the keynote that closes the partner conference and opens Microsoft's co-located internal sales conference.

Posted by Scott Bekker on July 16, 2018