Listeners probably recognize that I often group by theme or topic. Market conditions, security, and the like. Today, I’m clearing the decks of stories I think are impactful despite not fitting cleanly in a bucket of stories.
While I covered Microsoft’s earnings earlier, a quick recap. In its second quarter of 2025, Microsoft reported a revenue of sixty-nine point six billion dollars, marking a twelve percent increase from the previous year. What I noted and wanted to highlight was challenges in Azure sales were highlighted by Chief Financial Officer Amy Hood, who attributed these difficulties to partner sales execution and foreign exchange rates. Despite these setbacks, the intelligent cloud segment, which includes Azure, saw revenues of twenty-five point five billion dollars, a nineteen percent increase year over year. Additionally, Microsoft’s artificial intelligence business exceeded a thirteen billion dollar annual revenue run rate, more than doubling from the previous year.
Why do we care?
I feel like blaming your partners for your sales miss is a cheap move. blaming partners for a sales miss is a weak excuse, especially for a company of Microsoft’s scale. If partner sales execution is a problem, that reflects on Microsoft’s enablement strategy, training, or incentive structures. Microsoft’s partner ecosystem is massive and influential, but it also operates under Microsoft’s rules. If execution is lacking, the company should be looking at how it’s supporting and managing that network rather than shifting blame.
The fact that Microsoft is pointing to partner execution as an issue suggests that organic Azure growth isn’t as strong as they’d like. If demand were overwhelming, execution wouldn’t be the headline issue—it would be keeping up with it. Instead, this suggests customers may be hesitating, possibly due to cost concerns, multi-cloud strategies, or broader economic uncertainty.
Microsoft’s cloud business is still growing at a strong clip—19% YoY in this economy isn’t exactly a disaster. Blaming partners feels like a red flag for broader Azure sales challenges, not just an execution hiccup. IT providers in the Microsoft ecosystem should be watching for shifts in partner strategy—are incentives changing? Is Microsoft prioritizing direct sales over channel growth? This could impact long-term opportunities for service providers relying on Microsoft as a key vendor.
