Microsoft’s Nadella: Public Cloud Will Be ‘The Big Winner’ In Down Economy

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Wade Tyler Millward

‘The big winner in all of this is the public cloud because the public cloud helps businesses offset demand risk,’ said Microsoft CEO Satya Nadella.

Cloud vendors have finally acknowledged that a slow economy has affected their profits, but Microsoft CEO Satya Nadella sees a weak global economy as an opportunity to prove the need for the public cloud.

The public cloud allows Microsoft customers to control ramping and ramping based on demand, which also helps customers with rising energy costs, Nadella said during the latest quarterly call. of Microsoft’s income.

“The thing is, though, from a customer perspective — the best way for them to align their spending with what’s going to be uncertain demand is to move to the cloud,” Nadella said. “That’s why we see the value of the cloud. So the big winner in all of this is the public cloud because the public cloud helps businesses offset demand risk.

[RELATED: Microsoft Reports PC Trouble, Cloud Growth, SMB ‘Deal Moderation’]

How does Microsoft work?

While Microsoft Chief Financial Officer Amy Hood handled most of the financial bad news during the company’s earnings report for the first quarter of the company’s 2023 fiscal year — a quarter that ended Sept. 30 – Nadella has taken many steps to show the growth of the company built and new products.

Azure Arc has more than 8,500 customers, more than double from a year ago, Nadella said. Azure Machine Learning’s revenue has grown more than 100 percent for four quarters in a row. And GitHub is at $1 billion in annual recurring revenue with more than 90 billion people using the service.

At least three investment banks have reported confidence in Microsoft’s long-term abilities.

“Our thesis remains that the cloud and the underlying Office 365/Windows ecosystem will make up a bigger and bigger piece of Redmond going forward and ultimately drive growth and margins (and a lot) into FY23/FY24 despite this downturn,” Wedbush wrote in a report Wednesday. “We believe that the transition to the cloud is less than 50% penetrated and represents a huge opportunity for Nadella & Co.

It continued: “Our conversations with customers and partners underscore our confidence that MSFT will ride out this economic storm and ultimately be in a stronger position on the other side of the downturn. on the cost and strategic measures already in place.”

A Wednesday report by investment bank KeyBanc said that “despite cyclical headwinds in Azure and Windows/PCs, we remain strong long-term in MSFT’s hyperscale cloud and integrated infrastructure stack, application development platform, and expanding the business application portfolio.”

A report from Credit Suisse says that although a decline in small and medium business consumption and business headwinds in Microsoft’s Enterprise Mobility + Security

“Likely to continue to evaluate near-term growth, we view the negative impact of the current long optimization cycle as more temporary. As in previous optimization cycles that weighed on growth for ~1-2 quarters, an increase in new workloads then followed which brought growth back to more normal trends.

Here’s more of what Nadella had to say on Microsoft’s latest earnings call.

    Learn About Wade Tyler Millward

Wade Tyler Millward

Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at [email protected]


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