The Texas Department of Information Resources has chosen the Office 365 suite from the world’s largest software maker Microsoft Corp. (MSFT - Analyst Report). The department expects to use the services to modernize the IT infrastructure of the state of Texas.
The State of Texas has already deployed Office 365 across multiple state agencies such as Health and Human Services System, Department of Transportation, Department of Motor Vehicles, Department of Information Resources and Department of Insurance. The Department of Criminal Justice and the Alcoholic Beverage Commission will soon get on board as well.
The reason for deploying the Office software in various government departments of the State of Texas is to improve interdepartmental communication and collaboration capabilities. This will improve the efficiency of the workforce and at the same time reduce IT expenses of the state.
Microsoft’s Office 365 is a cloud-based, subscription-based software service. It was officially launched in 2011. The new Office comes with the traditional word processing, spreadsheets and email programs.
Microsoft’s Office 365 is gaining traction in the market as it recently launched its online version focusing on touch devices. Further, it is being deployed at the stores of retailers such as J. C. Penney Company Inc. (JCP - Analyst Report) and U.K.-based Tesco.
Currently, just like other PC makers, Microsoft is also battling the slump in the PC market caused by the sluggish economy. In addition, the popularity of smartphones and tablets from Apple (AAPL - Analyst Report) and Google has been cannibalizing PC market sales, further deteriorating the scenario. Whether it can come out of the slump on the back of its new software and OS is a wait and see game.
As per research conducted by IDC, cloud-based services may grow into a $100.0 billion market by 2016, representing a compound annual growth rate (CAGR) of 26.0%. Cloud services are expected to drive growth in IT going forward, generating 41.0% of overall growth by 2016. Thus, the strengthening of Microsoft’s position in the segment is encouraging as the PC market is showing no signs of revival in the near future.
Microsoft reported revenues, excluding deferrals, of $21.46 billion in the second quarter of fiscal 2013, which was up 34.0% sequentially and 2.7% from last year, in line with our estimates. All except the Entertainment & Devices segment grew both sequentially and from the year-ago quarter.
Microsoft has a Zacks Rank #3 (Hold).