Friday, March 17, 2017

Head in the cloud: What Satya Nadella did at Microsoft | The Economist

Excerpt from a profile of Microsoft in transition

"Mr Nadella has changed the firm’s organisation as well as its culture. It is now more of a vertically integrated technology firm—“full stack”, in the jargon. It not only writes all kinds of software, but builds its own data centres and designs its own hardware. Mr Nadella points out that it now even develops some of the chips for its data centres.

His imprint can be seen on three businesses in particular: the cloud, hardware and AI. Microsoft does not break out by how much it has increased investment in the cloud, but building data centres is expensive and its capital expenditure is soon expected nearly to double, to $9bn a year, from when Mr Nadella took over. If you take only basic services, such as data storage and computing, Microsoft’s cloud is much smaller than Amazon Web Services, the leader in cloud computing, which is owned by Amazon, an e-commerce giant. But if you add Microsoft’s web-based services, such as Office 365 and other business applications, which are only a negligible part of AWS’s portfolio, the two firms are of comparable size. Both AWS’s and Microsoft’s cloud businesses boast an annual run rate (the latest quarterly revenues multiplied by four) of $14bn. Microsoft hopes to reach $20bn by its 2018 financial year, a fifth of total expected revenues."
Head in the cloud: What Satya Nadella did at Microsoft | The Economist

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