What Intel, IBM Earnings Say About Microsoft

NEW YORK (TheStreet) -- When Microsoft (MSFT) reports its fiscal first-quarter earnings Thursday, all eyes will be paying attention to whether the software giant really has the muscle to keep its position in the cloud, and how the company's hardware push is going.

If Intel (INTC) and IBM's (IBM) earnings announcements last week provided any indication into what Microsoft might reveal during its own announcement, it's that the stakes are high to show it's succeeding in the cloud, while broadening its push into the hardware markets, according to Morningstar technology equity analyst Norman Young and Jack Gold, principal analyst at J. Gold Associates.

IBM revealed its ongoing struggles in its hardware business, which demonstrated a need for increasing its shift towards cloud services, and away from big system investments. IBM's hardware exposure spans from mainframes and servers to storage products. A relatively weak quarter for IBM's overall software products business reflected for Morningstar's Young that IBM could either be losing software market share or even be portending an industry-wide weakening of traditional enterprise software spending, amid continued strength in cloud investments.

But while IBM is relatively new in rolling out an aggressive cloud strategy, Microsoft has been pushing its cloud growth messages and services for many years. Investors will have a higher bar for how much the company has actually progressed in this area in the past quarter. Investors will be paying close attention to how Microsoft's key cloud computing services, Windows Azure and Office 365, performed during the quarter, as they could be longer-term indicators for whether Microsoft can compete with the likes of cloud kings Google (GOOG) and Amazon (AMZN).

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