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

Microsoft Focused On Azure

Our investment profile here is that this is the largest TAM (total addressable market) where we own a large number, have good growth rates with the kind of volatility you‘re seeing.

So we‘re going to stay focused on it. And in this particular period, I think we are going to optimize for long-term customer loyalty by proactively helping them optimize their spend, which I think is the right thing for us to be doing as a company on behalf of our shareholders, long term. … The way we see it is overall macro(economic conditions) will mean that everybody’s going to optimize their bill.

In fact, as Amy (Hood, Microsoft chief financial officer) said, our job No 1 for large swaths of our sort of even customer-facing organizations is to proactively help them optimize.

In fact, our incentives in our customer success teams are lined up with them helping customers go do more with less.

So that‘s sort of one side. The thing, though, from a customer perspective – the best way for them to align their spend with what is uncertain demand is to move to the cloud.

So we see the value prop of the cloud. So the big winner in all of this will be public cloud because public cloud helps businesses offset the risk of demand risk.

The other side … is the risk around supply chain or energy costs. And so that‘s another one. The best way to hedge against energy cost and be, in fact, more energy efficient is to move to the cloud. … For us, we look at this and say this is a period where cloud’s going to gain share because we’re still in the early innings of adoption.

And so we just want to invest going into it with that mindset to build long-term customer loyalty.