The technology worldview today drives the world. And the tech world is obsessed with the cloud. It is almost as if the cloud is eating the software.
There is a reason for the rush. In a post-pandemic world marked with video conferencing and remote work as increasingly the preferred options, almost all companies should be moving their computing to the cloud—a market expected to touch $1 trillion soon from the current $250 billion odd.
While historically the cloud firms competed on building the infrastructure as a service offering where performance determined the winner, it is the platformisation which is the new angle in the game by bringing in innovation. AWS has been the undisputed public cloud leader in the IAAS category. Where Microsoft scores is in being a strong hybrid player and of course enterprise favourite.
The Azure challenge
Microsoft, the most dominant software player of the last century under the leadership of Steve Ballmer, missed out on the five biggest technology trends—search, mobile telephony, mobile operating systems, media, and cloud. Microsoft continued to be a ‘products’ company focussed on Windows missing out on ‘services’ such as clouds, ads, and music.
The key trump card in Satya Nadella’s reinventing Microsoft has been putting Azure at the heart of business delivering double-digit growth, $1.6 trillion market cap, quintupling share value, and P/E ratios zooming past that of other big-tech. Surely Microsoft has rechristened itself from a products company to a products and services company to a cloud-first and mobile-first enterprise.
No wonder one of the three largest buckets for Microsoft today is the cloud, the other two being productivity software and business processes, and personal computing. It is Azure which drives Microsoft’s share prices, however, even as it makes up 1/10th of the annual operating profit of over $50 billion. For Microsoft to succeed in the cloud games, innovation will be the key to the game.
The India story
It’s the troika of Amazon AWS, Microsoft Azure, and Google Cloud with AWS and Azure with their ‘headstart legacy’ competing interchangeably for the number 1 position. And then there is Oracle Cloud, IBM Cloud, Salesforce, and SAP.
It is Google Cloud which has, however, been in the news recently for making major account acquisitions including a prized $20 million Adani deal while bringing in a solid leadership team in Oracle’s Thomas Kurian, IBM’s Karan Bajwa, and AWS’s Bikram Singh Bedi.
Another big-tech fight-out!
Microsoft has built its bridges with governments and regulators around the world by consciously working with them to support data protection and advocate cautious use of A.I., unlike other big tech firms who are regularly ending up on the wrong side with the authorities.
While Google and Facebook struggle with content moderation and data privacy issues, Apple with its treatment of competitor’s services in its app store, and Amazon with its ‘kill-them-all, take-it-all’ culture, it is Microsoft which deserves kudos for reinventing a new business model with the cloud as the new growth driver, invigorating the organisation with a new culture, and playing it mostly right with the governments and the regulators. There are lessons to be learnt for the other tech majors!
As-a-service is here to stay and cloud will lead the new digital transformation journey for companies big and small. Who will emerge as the undisputed cloud leader from the big-tech stable remains to be seen.
Views are personal. The author is Executive-in-Residence, UCLA, and a C-suite+ and startup advisor.
