Microsoft Buys FSLogix, Ups Ante in Desktop Virtualization
Microsoft MSFT seems to be on an acquisition spree. The company recently acquired FSLogix in a bid to gain desktop virtualization capabilities to enhance Office 365 suite. However, the financial terms of the deal have been kept under wraps.
The buyout is aimed at boosting customer experience and productivity. Notably, Office 365 is a subscription plan to access Office applications and other productivity services utilized in cloud services.
FSLogix which is based out of Atlanta, GA was founded in 2012. Per Crunchbase, it has raised $10.3 million. FSLogix develops robust software applications that enable enterprises to support virtual desktops in a cost-effective and time saving manner.
FSLogix has supported desktop virtualization for clients having less than 1,000 users to enterprises with over 50,000 users. The flagship products include FSLogix Profile Container and other FSLogix Apps. FSLogix has also developed Office 365 Container, for Microsoft. The product is aimed at enhancing Office 365 engagement across virtual desktop infrastructure.
FSLogix capabilities are expected to facilitate Office 365 ProPlus performance with faster load times, across multi-user virtual infrastructure, comprising the new Azure-supported Windows Virtual Desktop service which was showcased at Ignite event in September. OneDrive and Outlook users will also benefit from the accelerated performance.
Notably, Windows Virtual Desktop service which offers a virtual Windows 10 experience is compliant with Office 365 ProPlus. The new multi-user service is aimed at enabling customers to benefit from the security and compliance features of Azure cloud platform.
Desktop Virtualization Capabilities: A Key Catalyst
A virtual desktop supports an operating system in a cloud platform, compared with that on a standalone device. This creates a multi-user environment enabling each user to utilize the required set of applications, in turn enhancing productivity.
The desktop virtualization market is expected to accelerate in the near future on the heels of ongoing workspace trends of Bring Your Own Devices (“BYOD”), increasing mobile workers, among other factors. Small and medium enterprises, healthcare companies and increasing popularity of desktop virtualization across Asia-Pacific remain key growth drivers in the space.
In fact, per Orbis Research data as revealed by Reuters, the desktop virtualization market is projected to reach $8.96 billion by 2023 from $4.98 billion valued in 2017at a CAGR of 10.3% from 2018 to 2023.
In this particular domain, Microsoft competes with Citrix, Red Hat (to be acquired by IBM), VMware, among other companies. We believe acquisition of FSLogix will enable the company to fortify its competitive position in the rapidly growing desktop virtualization market.
Top Line to Benefit from Enhanced O365 Engagement
Microsoft is firing all cylinders to catch up with Alphabet’s GOOGL G-Suite by empowering Office 365. In the last reported quarter, Office 365 commercial revenues grew 36% (35% at cc), driven by strong installed base growth and average revenues per user (ARPU) expansion. Office 365 Commercial seat improved 29% on a year-over-year basis. Office 365 consumer subscribers were reported at 32.5 million, up 1.1 million sequentially.
Notably, Office 365 revenues are reported under Productivity & Business Processes segment. The segment revenues of $9.77 billion increased 18.6% (up 18% at cc) from the year-ago quarter.
On the heels of the aforementioned factors, we may conclude that Microsoft is leaving no stone unturned to enhance its Office 365 suite. The new capabilities aimed at boosting engagement, will consequently bolster Office 365 adoption rate. This in turn is likely to benefit top-line growth.
Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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