Wade Tyler Millward
“The big winner in all of this is going to be the public cloud, because the public cloud helps businesses offset the risk of demand risk,” says Microsoft CEO Satya Nadella.
Cloud vendors have finally acknowledged that the economic slowdown has hurt their bottom line, but Microsoft CEO Satya Nadella sees the weaker global economy as an opportunity to prove the need for the public cloud.
The public cloud allows Microsoft customers to control scaling up and down based on demand, which could also help customers reduce energy costs, Nadella said on Microsoft’s latest quarterly earnings call.
“However, from a customer’s perspective, the best way to adjust your spending to meet uncertain demand is to move to the cloud,” Nadella said. “So we see the value of the cloud. So the big winner in all of this is going to be the public cloud, because the public cloud helps businesses offset the risk of demand risk.
[RELATED: Microsoft Reports PC Trouble, Cloud Growth, SMB ‘Deal Moderation’]
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While Microsoft’s CFO Amy Hood handled a lot of financial bad news in the company’s first-quarter earnings report for fiscal 2023 (the quarter that ended Sept. 30), Nadella still had plenty to show for the company’s growth. established and new products.
Azure Arc has more than 8,500 customers, more than double a year ago, Nadella said. Azure Machine Learning has seen revenue growth of more than 100 percent for four consecutive quarters. And GitHub’s annual recurring revenue is $1 billion, with more than 90 billion people using the service.
At least three investment banks reported confidence in Microsoft’s long-term capabilities.
“Our thesis remains that the cloud and the underlying Office 365/Windows ecosystem will continue to form an increasingly large part of Redmond and ultimately drive growth and profits (and more) in FY23/24 despite this downturn,” Wedbush wrote . in a report on Wednesday. “We believe the shift to the cloud is still less than 50%, and this is a huge opportunity for Nadella & Co.
It continued: “Our conversations with customers and partners underline our belief that MSFT can weather this economic storm and ultimately emerge stronger on the other side, already through cost reductions and strategic actions.”
Investment bank KeyBanc said in a report Wednesday that “despite cyclical headwinds from Azure and Windows/PC, we remain bullish over the long term on MSFT’s expanding portfolio of hyperscale cloud and integrated infrastructure stacks, application development platforms, and business applications.”
A Credit Suisse report said that while the decline in SMB consumption and headwinds are for Microsoft’s Enterprise Mobility + Security business.
“Likely to continue to weigh on near-term growth, we believe the negative impact of the current heightened optimization cycle is more short-lived. Similar to previous optimization cycles, which impacted growth for about 1-2 quarters, this was followed by an increase in new workloads that pushed growth back to for more normalized trends.
Here’s more on what Nadella said during Microsoft’s most recent earnings call.