Microsoft (MSFT) is officially a cybersecurity giant. For the first time on Tuesday, Microsoft released revenue from its various security offerings as part of its quarterly earnings – $ 10 billion over the past 12 months.
This equates to a 40% jump year on year in the growing security business, representing about 7% of the company’s total revenue in the previous year.
“We hope in some sense [until] this milestone to show the depth, breadth, breadth of what we’re doing, ”Microsoft CEO Satya Nadella told Yahoo Finance in an interview on Wednesday, the day after the company released its quarterly earnings report .
“And you know, [there’s] a lot of work ahead, but we are investing a lot, guess what? You know that 10 years from now we’ll still be talking about it, as the technology becomes uniform [a deeper part] of our lives in our society in all critical industries. “
The $ 10 billion figure comes from security-related revenue generated by services, including Microsoft’s Azure Active Directory, Intune, Microsoft Defender for Endpoint, Office 365, Microsoft Cloud App Security, Microsoft Information and Governance, Azure Sentinel, Azure Monitoring and Azure Information Protection.
Each of them constitutes what Microsoft calls the Smart Cloud and Productivity and Business Process segments. These comprehensive segments generated $ 14.6 billion and $ 13.4 billion in revenue, respectively, in the company’s second fiscal quarter of 2021.
“What we build is very useful in times of crisis and there is a major crisis now,” said Nadella. “But you obviously need to build all of that over a period of years, if not decades, and then sustain it through not only product innovation, but also, I would say, everyday practice.”
The announcement follows Microsoft’s involvement in discovering the scale of the massive SolarWinds cyber attack in December, which hit private companies like the cyber security firm FireEye (FEYE) and government agencies, including the Treasury, Commerce and State Departments, as well as National Nuclear Security Administration and the Department of Homeland Security.
Microsoft itself has also been hacked, although no customer data has been breached. A Reuters report indicated that as part of the National Telecommunications and Information Agency hack, Microsoft’s Office 365 software was attacked, allowing attackers to monitor the agency’s emails for months. Microsoft, however, said at the time that it did not identify vulnerabilities in its cloud or Office software.
Although hit by the attack, Microsoft also worked with the government and customers to help determine the scale of the hack.
“I was very proud to have become the first to respond to this attack,” Vasu Jakkal, Microsoft’s corporate vice president for security, compliance and identity marketing, told Yahoo Finance.
“We were the defenders that the other defenders were using. We were working with FireEye and in all the public and private sectors that said, ‘What should we do and how should we protect our world from this?’ ” she said.
Part of Microsoft’s ability to respond to the hack has to do with what is called a “zero-trust” architecture, explained Nadella. This basically means that a company’s cybersecurity features always work as if there were some kind of breach. It is a defense against not knowing what to do when a new hack comes up that you cannot protect yourself from.
“One of the things about Microsoft investment is not just about security investment – which is substantial when you look at Defender or Sentinel or Azure Active Directory and the list goes on – but it is this ability to take all of our investments in AI and data and infrastructure and bring them to support security, ”said Nadella. “And that, I think, is what makes us unique.”
Working from home increases business security needs
The SolarWinds hack came about when the coronavirus pandemic spurred many companies to allow their employees to work from home, which introduced a new attack vector for hackers. When you are working in your office, you are, with luck, stuck with a secure connection that can monitor things like malware or other strange network activity.
At home, however, you are running on your own network, adding an obstacle to your employer’s ability to protect yourself. It wouldn’t be long before you download malware onto your home computer and then accidentally send that software to your company’s systems when you connect to the network to update a spreadsheet or upload a report.
“Security must be built at every point,” said Jakkal. “It can’t be an afterthought,”
Microsoft says it currently protects more than 400,000 customers in 120 countries, including 90 Fortune 100 companies. The technology giant divides its security offerings into four categories: security, compliance, identity and management.
Part of this includes providing security not only for devices with Microsoft technology, but also for those running Google’s iOS and Apple’s macOS (AAPL) and Android (GOOG, GOOGL), as well as products running on competing cloud platforms such as Amazon (AMZN) Amazon Web Services and Google Cloud Platform.
“There needs to be a really different approach to creating a cybersecurity solution for customers,” said Nadella.
“In what is an interconnected world, it is not a one-off solution, but having, I would say, an architectural approach, which needs to be reinforced every day.”
As cloud services continue to expand and Microsoft’s share of the industry grows with them, protecting customers who use these services will become increasingly important.
“It’s not just a transformation for you to stay in business. You need to have that digital control plan, not just for your employees, so they can log on to their home PCs and be on calls from Teams, ”said Nadella.
“Your plant needs to continue where engineers and operational data need to be analyzed. This is the transformation that I think we are seeing accelerating ”.
Obviously, hackers and cybercriminals will continue to attack companies, regardless of the company that protects them. But with the continued growth of cloud computing and an expanded home work environment, Microsoft benefits as a player in the cybersecurity industry.
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