"We want to empower every individual and every organization to be able to thrive," Microsoft CEO Satya Nadella said at an event in San Francisco.
Courtesy of JP Mangalindan/Fortune.com

Microsoft CEO Satya Nadella gives a sales pitch for cloud services as his company to tries to emphasize its strength with business customers.

By JP Mangalindan
October 20, 2014

Microsoft CEO Satya Nadella says the cloud is vital to his company’s future.

“We want to empower every individual and every organization to thrive,” Nadella said at an event in San Francisco on Monday.

It’s a message that he hopes potential business clients will take to heart as he tries to lift Microsoft’s fortunes after a year of upheaval during which he replaced longtime leader Steve Ballmer. His company is under attack like never been before from rivals like Google and Apple along with an array of companies focused on corporations.

Nadella emphasized again and again that Microsoft wants business customers, small and large, to use its data centers for storing digital files, housing software and crunching numbers. To hammer the message home, Nadella name-dropped companies already using Microsoft’s cloud already.

There’s NBC, which uses Microsoft’s cloud services to live-stream video. Fashion retailer Paul Smith relies on Microsoft’s data centers to back up its digital files. Meanwhile, German elevator-maker ThyssenKrupp stores data from 1.1 million elevators like speed and motor temperatures in Microsoft’s server farms.

In an effort to show how useful its cloud services can be in a global crisis, Nadella said Microsoft would make its cloud services available to medical researchers tackling the Ebola epidemic, as well as research capable of helping with discovering a vaccine. Nadella did not say whether Microsoft would charge for the services.

Microsoft MSFT peddled “The Cloud” long before Nadella became CEO nearly eight months ago. Although Microsoft still dominates software sales in the declining PC business with a 90%-plus market share, it only has a 14% share among mobile devices, Nadella said at Fortune’s Brainstorm Tech conference in July.

Considering how far behind it is in mobile, Microsoft is trying to aggressively grow its pure business services. It’s an area in which the company has always done well and faces less competitoin from the likes of Google and Apple, which dominate the consumer space.

In the four years since introducing Azure, its main cloud platform, Microsoft has been fiercely battling Amazon AMZN and its cloud service, Amazon Web Services, on features and pricing. Indeed, Microsoft introduced more than 300 new features to its service over the past 12 months alone.

On Monday, Microsoft showed off yet more new services that are meant to undercut the competition. Those included a faster kind of “virtual machine,” or simulated computer system, dubbed the “G family,” with twice the memory of Amazon’s virtual machines and four times the memory of Google’s GOOG .

This year may prove to be a watershed for Microsoft. Its cloud business currently generates $4.4 billion in annual revenues. But Nomura analyst Rick Sherlund estimated in August the company will become the largest cloud business by the end of the year with around $5.8 billion in annual revenues. By contrast, Amazon Web Services and Salesforce.com would make $5.5 billion, he said. And even if Microsoft doesn’t hit those numbers, it has more cash to burn — $77 billion — which it can funnel into its cloud products, if needed. Promised Nadella: “This is just the start.”

You May Like