CEO Satya Nadella says ‘we’re living through a generational shift in our economy and society.’
Satya Nadella is ready to catch the next wave.
The Microsoft (MSFT) – Get Microsoft Corporation Report CEO spoke about the future during the software giant’s second-quarter earnings call late Tuesday
The company beat Wall Street’s second-quarter earnings estimates, posting record revenue of $51.7 billion and earnings of $2.48 a share. Revenue for Azure, Microsoft’s flagship cloud division, rose 46% from last year, helping overall group revenues rise 20% to a record $51.7 billion.
‘A Generational Shift’
“We’re living through a generational shift in our economy and society,” Nadella said, according to a transcript of the company’s earnings call. “Digital technology is the most malleable resource at the world’s disposal to overcome constraints and reimagine everyday work and life.”
Microsoft, he added, is innovating and expanding its entire portfolio across consumer and commercial segments “to help people and organizations thrive in this new era.”
With the acquisition of Activision Blizzard, announced last week, Nadella said “we are investing to make it easier for people to play great games wherever, whenever, and however they want, and also shape what comes next for gaming as platforms like the metaverse develop.”
The metaverse, the new Buzzword in the Tech world, is a world of persistent, real-time, seamless, and immersive 3D virtual reality or mixed reality worlds and simulations, wherein humans can interact with digital-world objects through a range of devices. The metaverse is expected to enable people to shift more and more activities done currently in the physical world to the virtual world.
Nadella said he views “the metaverse as an opportunity in a very classic Microsoft sense, both at the platform infrastructure level and on the application level.”
“The first place where we see this is the increasing digitization of people, places, and things to be able to really help businesses automate processes to the next level,” he said. “Today, between Azure IoT, digital twins and Mesh, we have many examples where customers are engaged with us. That’s what will show up in Azure and we’re investing significantly there.”
Nadella added that “the demand will come in different forms for different categories, but we feel very well-positioned to be able to catch what I think is essentially the next wave of the internet.”
“Just like the first wave of the internet allowed everybody to build a website, I think the next wave of the internet will be a more open world where people can build their own metaverse worlds, whether they’re organizations or game developers or anyone else,” he said.
‘Seeing the Trends’
The questions turned to the pandemic and how it accelerated migration to the cloud and the post-Omicron world and some level of office re-openings.
On Tuesday, Commerce Secretary Gina Raimondo issued a dire warning for Congress on semiconductor chips Tuesday, saying “we aren’t even close to being out of the woods as it relates to the supply problems with semiconductors,” CBS News reported.
“The semiconductor supply chain is very fragile, and it’s going to remain that way until we can increase chip production in the United States,” Raimondo said.
“We were seeing significant demand for what was our Customer Insights module going into the pandemic because everybody needed to deploy essentially their online presence and use customer data to be able to reach customers, and that’s how commerce happened during the pandemic,” Nadella said.
Coming out of the pandemic, Nadella said “we were hit with supply chain issues, so supply chain insights became the most important thing. That’s where the demand picked up.”
“I always go back to that simple formula, as a percentage of GDP, what is IT spend, broadly defined, and what is it going to be a year from now, two years from now, five years from now, 10 years from now?” Nadella said. “It’s just going to be more. And we’ve got to do a good job of seeing the trends before that conventional wisdom and gaining share, and so that’s where we’ll remain focused.”
