Satya Nadella sees a decade of strong growth in tech spending as we harness technology to tackle some of the world's pressing challenges.
ANALYSIS: The rather static feel to Inspire 2020, Microsoft’s big annual event for partners live-streamed this year due to the pandemic, belies the fact that business is booming for the software maker.
As thousands from around the world tuned into Inspire, Microsoft was reporting earnings for the three months to June 30 that beat Wall Street analysts’ expectations. Revenue was US$38 billion for the quarter, up 13 per cent on last year. The company posted a US$11.2 billion profit up five per cent.
Covid-19 has been good for Microsoft’s bottom line, as evidenced by the double-digit growth in its intelligent Cloud division, which contributed US$13.4 billion in revenue – up 17 per cent on last year. Azure, the centre of that business grew 47 per cent, while Microsoft also saw strong gains across its Surface devices, Xbox gaming and even its mature Windows business.
No one expected the last quarter to be a wash-out. Organisations accelerated their uptake of cloud computing services, government departments placed orders for thousands of Surface devices and clearly, a good number of video gamers had more time on their hands.
Inspire 2020: What you need to know – the big announcements from Microsoft’s annual event for partners.
But the message from Microsoft chief executive Satya Nadella, in his Inspire 2020 keynote, was that the rest of the decade will be characterised by the digital transformation of business and whole sectors all over the world.
At a time when some countries are facing the prospect of double-digit declines in gross domestic product (GDP) decreases for 2020, Nadella repeated his upbeat forecast from last year’s Inspire – that GDP technology spending will double to represent 10 per cent of global GDP by the end of the decade.
That equates to a US$14 trillion business. Then there’s the other 90 per cent of the global economy that technology is transforming.
“This pandemic has accelerated that long term trend,” Nadella told Inspire viewers.
“Those fortified by digital technology are more resilient, more capable of transforming when faced with these secular structural changes in the marketplace,” he said in a keynote that dwelt heavily on the mobilisation of technology in response to the pandemic.
Nadella thanked digital first responders as well as the Microsoft partner community, which had enabled them to tackle the public health crisis while allowing businesses to continue operating in the face of lockdown conditions and stay at home orders.
“You’ve helped businesses maintain continuity and stay open in the most constrained and in the most difficult of circumstances,” he said.
Microsoft has been busy this year announcing the development of seven new Azure data centre regions to support the growth of Azure, including one planned for New Zealand in the next 18 months, the first multinational cloud computing player to commit to local infrastructure.
The rest of the growth this decade, said Nadella, would come with the accelerated use of data and artificial intelligence services, business applications and multi-device collaboration. He was also keen to highlight the cloud as an enabling technology that its global community of partners can profit from.
“For every dollar our cloud generates in revenue, in the local region, our local partner generates as much as nine additional dollars,” he said.
“The world is at an inflection point, it is time for us to get to the very core purpose of a modern corporation and what it means for the world going forward.”
It has, so far, has been an Inspire event lighter on major product announcements than in previous years, but one, in true Nadella style, designed to show the software and services giant is in tune with the world’s priorities.
“We support the fundamental rights, from defending democracy to addressing systemic racial injustices and inequity,” said Nadella, touching on both efforts to manipulate elections and the civil disobedience of the Black Lives Matter movement.
“We believe that [our] purpose is to create a profitable solution to the challenges of people and planet in every community in every country around the world,” he summed up.
Sustainability was a major theme too, with Microsoft pledging that by 2030, it will be a “carbon negative company” across its direct emissions as well as its supply chain.
In a similar move, Apple this week committed to becoming 100 per cent carbon neutral by 2030 “across its entire business, manufacturing supply chain and product life cycle”.
The rhetoric then from the world’s biggest software company, as parts of the world continue to struggle to contain Covid-19, is that the next decade is one of major promise – to use technology to tackle the world’s problems and to profit in the process.
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