Microsoft Hasn't Really Hit $1 Billion In Revenue From Its Amazon-Killer Cloud

In the past 12 months, Microsoft has generated $1 billion in revenue from its cloud computing platform, Azure, and other software used to build clouds, Curt Anderson, finance chief for Microsoft’s server and tools unit told Bloomberg

That sounds pretty amazing, as if Azure is right on the heels of the biggest cloud computing player, Amazon.

But that's not really the case.

Anderson is also counting the sales of software to hosting providers to build clouds, he told Bloomberg. For instance, Microsoft sells a version of its popular Windows Server platform to hosting providers and we would expect Microsoft to do well with it.

That's because with cloud computing, companies don't buy their own software and hardware. Instead they rent it from others and access it remotely over a network like the Internet. And renting Windows Server is a big thing enterprises want to do. The big question is if Microsoft can get them to rent Windows Server from Microsoft.

There's billions of dollars at stake as enterprises shift from buying software licenses from companies like Microsoft to renting cloud computing services from companies like Amazon.

If Microsoft had truly earned $1 billion of revenue from Azure alone, it would be doing well. Amazon made an estimated $2.1 billion in revenues in 2012 on its cloud, Amazon Web Services, according to Wall Street analyst Ben Schachter Macquarie Capital. He estimated that AWS would generate $3.8 billion in revenue in 2013. We don't know AWS's actual revenues because it includes AWS in its “other” revenue category.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.