The first quarter of 2015 has come to a close, and the technology and payments giants are rolling out their earnings reports. PYMNTS listened, analyzed, and compiled the latest (and most relevant) scoop, with loads of updates of the B2B goings on within Microsoft, Amazon, eBay and American Express.
Only weeks ago, Microsoft CEO Satya Nadella declared the dawn of the Software-as-a-Service era, and the company’s earnings call last week uncovered supporting figures of that trend. According to Microsoft COO Kevin Turner, the company has an optimistic outlook for the future of its B2B software tools. “Around the world we’re seeing high interest in deployment of our cloud and server products,” he said, “as well as participation in the enterprise early adapter program for Windows 10.”
As our write-up last week pointed out, the good news was everywhere except Microsoft’s traditional PC business. Commercial cloud computing sales, including Office 365 and Azure, more than doubled over the past year (up 106 percent). Windows revenue for businesses fell 19 percent, and dropped 26 percent for consumer versions of the operating system. In each case, that was much more than the 6.7 percent global decline in PC sales. Office commercial products and services revenue fell 2 percent. Overall, the commercial software business rose 5 percent to $12.8 billion, but that included cloud versions.
Microsoft also began striking deals during the quarter with current payments players, including PayPal (to support PayPal’s mobile app and card reader on Surface tablets) and MasterCard (to provide point-of-sale solutions for small merchants in Mexico). Along with Microsoft’s longstanding position in PC-based point-of-sale systems, the company seems to be getting set to make a serious run at payments — once it’s finally ready.
The U.S.’s eCommerce behemoth unveiled plans for global expansion during its earnings call, including new initiatives in China and India. Among these projects include the recent launch of a B2B eCommerce site in India, as well as a new mobile app for Amazon sellers that allow merchants to more easily update their inventory, source new products and list new items on Amazon. From our write-up last week:
“A big part of the challenge there is helping sellers all across India to succeed and grow their online businesses,” Amazon CFO Thomas Szkutak said, adding that the company remains “very excited” about its investments in the nation.
Aside from international expansion, Amazon touched upon its Amazon Web Services cloud computing platform, yet another example of the corporations’ emphasis on SaaS. From the PYMNTS report:
This quarter AWS also launched several new features to make it easy for mobile developers to use Lambda for mobile, tablet and Internet of Things applications.
“Amazon Web Services is a $5 billion business and still growing fast — in fact it’s accelerating,” said Jeff Bezos, Amazon’s CEO, in the earnings press release. “Born a decade ago, AWS is a good example of how we approach ideas and risk-taking at Amazon. We strive to focus relentlessly on the customer, innovate rapidly, and drive operational excellence. We manage by two seemingly contradictory traits: impatience to deliver faster and a willingness to think long term. We are so grateful to our AWS customers and remain dedicated to inventing on their behalf.”
As eBay and PayPal continue their journey toward separation, the firms’ most recent reports revealed that PayPal is surging, while eBay is lagging behind. But eBay’s plan of attack to improve its numbers largely include marketplace updates to improve the retail experience not just for the consumer, but also for the merchant. What the company failed to delve into, however, were plans for its B2B merchant service, eBay Enterprise.
As PYMNTS noted last week: Similar to eBay’s fourth-quarter earnings call, challenges in growing its core Marketplaces business were emphasized again as a key component to growth for the company. Leading the charge on that discussion with analysts yesterday was Devin Wenig, eBay Marketplace’s president, who will take over as CEO upon the eBay/PayPal split. While the fourth-quarter’s report about its marketplaces posted a disappointing quarter, Wenig indicated that new investments in adding upgraded search features that create a more seamless experience for both the buyer and the merchant will help its marketplaces business achieve the much needed growth from its core customer base.
“On the sellers’ side, eBay’s sweet spot is small and medium sized merchants and brands. They represent 70 percent of the global retail market, offering the diverse inventory and value our consumers are looking for,” Wenig said. “As a partner and not a competitor to SMBs, we intend to make eBay the global platform for them to grow and to thrive. We will offer improved seller tools, unmatched access to data and more balanced and predictable policies and standards. Consumer selling is another key eBay strength and we plan on revitalizing this segment of our market. …With simplified listing flows, predictive pricing data and higher touch intermediation for those that require it, we intend to make eBay the platform for consumers to buy and sell anything, anytime, anywhere.”
As for other sides of eBay’s platform, the future still remains unclear for eBay Enterprise as no update was provided beyond information from the company’s fourth-quarter earnings, when it was announced that eBay was “exploring strategic options for eBay Enterprise, including a sale or IPO.” eBay indicated that path was still moving forward, but didn’t indicate which of the options eBay Enterprise would head toward.
The biggest news at American Express so far this year is its severed ties with Costco, which ended its AmEx exclusivity deal after 16 years with the credit card company. To fill the gaps left behind, AmEx CEO and Chairman Kenneth Chenault said SMEs will play a vital role in securing more of these exclusive agreements and merchant loyalty. From our coverage last week:
As it looks beyond its larger partnerships that won’t be moving forward with the company, AmEx said they’re dedicated to driving the segment it’s been know for since the start, and that’s the Main Street shops.
“We do a lots of things to try to help small businesses operate better,” Chenault said in the call with analysts. “When you look at our OPEN [membership], which on the issuing side is about targeting small business, it’s really all about helping small businesses drive the success of those businesses and giving them access to spend capacity that our business model and charge card model is able to fairly uniquely provide them.”
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