Microsoft ready to 'compete hard' with AWS on the back of Q2 growth
Financial analysts question Nadella about AWS' recent moves in the enterprise space
Microsoft CEO Satya Nadella has said he is ready to "compete hard" against cloud rival Amazon Web Services (AWS), after being grilled by a financial analyst on the latter's commercial plans on a Q2 earnings call.
Nadella (pictured) said that differentiating Microsoft cloud messaging in the commercial space will be key to its success, after the analyst said there is belief in the investor community that AWS will become a strong player in the business space, which was not typically its stronghold.
Nadella rebuffed the concerns.
"Even in the client server era we had tough competition - we had Oracle, we had VMware, and many other players that I grew up competing with," he said. "We now have AWS who I think is going to be a credible competitor. I feel that we have a cloud strategy which is not just about infrastructure, it is about SaaS and infrastructure, and we need to uniquely think of the things we can do to differentiate and add value to our customers' digital estate in the cloud in that context. That's where our fair share will come from - from competing hard if we have to, and mostly thinking about differentiation."
For the three months to 31 December, non-GAAP net income at Microsoft rose 10 per cent annually in constant currency to $6.5bn (£5.2bn) on revenue which over the same period rose four per cent to $26.1bn on the same basis.
Sales in its Productivity and Business Processes group - the new home of LinkedIn - rose 12 per cent in constant currency to $74bn, while in the Intelligent Cloud arm, revenue rose 10 per cent in constant currency to $6.9bn. Its More Personal Computing arm saw sales fall four per cent in constant currency to $11.8bn.
Figures from analyst Context yesterday showed that Windows 10 is now the most popular Windows business OS in western Europe, overtaking the version which is "downgradable" to Windows 7 for the first time.
When quizzed by analysts about Windows 10, Nadella said the overall adoption of the OS in the enterprise is "perhaps the best we have seen for any new release of Windows", mainly because of the "security and manageability" of the new product.
"That's what has been the driver," he said. "In addition to that, I must say there are two other things which have become increasingly fairly relevant in the adoption, and those are moving to both Office 365 and Windows 10, and getting essentially to this new frontier of productivity, which is this new, always up-to-date operating system which is secure. We are increasingly seeing that resonate, not just in small businesses, or the high-tech industry as it has been in the past, but now in the regulated industries, so we are excited about that. The other piece is hardware innovation by the entire ecosystem. The work we did with the Surface line stimulated some of the best innovative work. The enterprise adoption of these new devices is also driving the overall excitement about Windows 10 innovation."