Today, I gathered with the tech community in the Seattle area at the GeekWire Cloud Tech Summit to talk about how customers are using the cloud and what the future holds. I joined GeekWire’s Todd Bishop and Tom Krazit on stage for a fireside chat to share more about Microsoft’s vision for emerging cloud innovation, but I also got to connect with many of you directly. In those conversations, it became even more apparent just how many of you are turning to the intelligent cloud to explore how emerging innovation like serverless, blockchain, edge computing, and AI can help you create solutions that can change your business — and people’s lives.
At Microsoft, we’re continually releasing technology that’s inspired by our customers and what you tell us you need to make the intelligent cloud and intelligent edge a reality for your businesses. For example, you may need to build applications to work in remote areas with low connectivity. Or you need to store, access, and drive insights from your data faster because of competitive pressures. And, you need confidence that your data and applications will be secure, resilient, and highly available across the globe.
During my time with Tom and Todd, I announced a few of our latest Azure solutions and newest regions and availability zones designed to bring this vision to you, our customers, and I’d like to share more on these new technologies.
Introducing the next level in big data analytics
Azure Data Lake Storage Gen2 and general availability of Azure Data Factory capabilities
Data is currency for enterprises today, and we know you need to be able to easily store and quickly access your data to drive actionable insights. You also need to be able to ingest and integrate big data quickly and easily to get to insights more readily. Today, we are introducing a preview of a highly scalable, highly performant, and cost-effective data lake solution for big data analytics, Azure Data Lake Storage Gen 2, to deliver the scale, performance, and security needed by your most demanding and sensitive workloads.
Because Azure Data Lake Gen2 is built on the foundations of Azure blob storage, all data — from data that is constantly in use through to data that only needs to be referenced occasionally or stored for regulatory reasons — can coexist in a single store without having to copy data. This means that you will have greater speed to insight over your data along with rich security at a more cost-effective price. Azure Data Lake Storage also provides a unified data store where unstructured object data and file data can be accessed concurrently via Blob Storage and Hadoop File System protocols.
Today also brings the general availability of new features in Azure Data Factory to deliver data movement as a service capacities so you can build analytics across hybrid and multicloud environments, and drive raw data into actionable insights. The new features include a web-based graphical user interface to create, schedule and manage data pipelines, code-free data ingestion from over 70 data source connectors to accelerate data movement across on-premises and cloud, and ability to easily lift SQL Server Integration Services packages to Azure and run in managed execution environment in Azure Data Factory. You can also start taking advantage of native ADF connector for Azure Data Lake Storage to load your data lake at scale.
Enabling the intelligent edge
Azure IoT Edge is generally available
In the next 10 years, nearly all our everyday devices and many new devices will be connected. These devices are all becoming so “smart” that they can power advanced algorithms that help them see, listen, reason, predict and more, without a 24/7 dependence on the cloud. This is the intelligent edge, and it will define the next wave of innovation in how we address world issues: distributing resources like water and oil, increasing food production and quality, and responding to natural disasters.
As key part of our strategy to deliver the promise of edge computing is Azure IoT Edge, which enables consistency between cloud and edge. This means you can push AI and machine learning to the edge, providing the most comprehensive and innovative edge offering on the market. As of today, Azure IoT Edge is generally available globally, with new updates for increased flexibility, scalability, security, and more.
Also today, the Azure IoT Edge runtime is open sourced and available on GitHub. If you are a developer, this gives you even greater flexibility and control of your edge solutions, so you can modify the runtime and debug issues. Azure IoT Edge now also supports more languages than another other edge solution including C#, C, Node.js, Python, and Java, and we’ve added support for the Moby container management system. Additionally, we’ve released a Device Provisioning Service that enables you to provision tens of thousands of devices with zero touch. The new Security Manager for Azure IoT Edge acts as a well-bounded security core for protecting the IoT Edge device and all its components by abstracting the secure silicon hardware.
Azure IoT Edge customers like Schneider Electric and a farmer in Carnation, Washington are building sophisticated solutions that deliver real-time insights in areas with unreliable connectivity. Now that the solution is production-ready, with enhanced features, we can’t wait to see what else you build.
Azure global infrastructure
New Azure regions
We continuously invest in our cloud infrastructure to give you more compute power to enable the intelligent cloud and intelligent edge. We’ve announced 54 Azure regions to help you deliver cloud services and apps to nearly every corner of the globe and to provide everything that’s needed to run mission-critical applications, across scenarios, with a full set of resiliency solutions.
Today, we expanded our Azure presence in China, one of the most dynamic cloud markets in the world, with two additional regions now generally available. We were the first international cloud provider in China in 2014 (in partnership with 21Vianet), and today’s announcement doubles the number of Azure regions available there. We continue to see immense opportunity in China for cloud services to fuel innovation and multinational corporations including Adobe, Coke, Costco, Daimler, Ford, Nuance, P&G, and Toyota, which are choosing our intelligent cloud services to help deliver for their customers in China. This builds on our recently announced plans to expand our cloud infrastructure in Europe and the Middle East and announced plans for new regions coming to Norway.
We’re also constantly increasing Azure’s resiliency capabilities with the addition of new Azure Availability Zones. Our Availability Zone in the Netherlands is now generally available, adding to the Zones already available in Iowa and Paris. The combination of region pairs and Availability Zones not only increases Azure’s resiliency capabilities, but broadens customer choice for business continuity architectures and delivers an industry-leading SLA for virtual machines.
It’s an exciting future
It was great to see all of you at GeekWire Cloud Tech Summit today. For those of you who weren’t able to be there live, you can follow along online. As always, we will continue to focus on building the technologies you need to drive innovation and disruption with the intelligent cloud and intelligent edge. Let us know what you think about these new solutions by sharing your feedback and comments.
Satya Nadella is most well known for transforming Microsoft as its third, and current, CEO. He’s taken the company in a new and exciting direction, doubling its stock price and heading new initiatives into bleeding-edge technologies.
But he’s also a cricket lover, an outspoken advocate for accessibility in the tech world and a big fan of poetry.
Nadella lifted the veil on his life at Microsoft and what has shaped him during his talk at the 2017 GeekWire Summit and in his new book, “Hit Refresh.” “It’s reflections of a sitting CEO going through that process, that hard process of transformation,” Nadella said about the book. “You’ll never ever reach your destination. How do you keep hitting refresh and being smart about it?”
During his appearance at the GeekWire Summit, Nadella also touched on topics like the future of tech — which he said will be driven by three key technologies — and his personal story, including how Nadella’s son, Zain, has influenced his life and outlook on the world.
Listen to the full conversation in the player above, watch the video below, download the conversation as an MP3, and continue reading for an edited transcript.
Be sure to subscribe to the GeekWire podcast to hear more interviews and talks from this year’s Summit — find the show in Apple Podcasts, Stitcher, Google Play or wherever you get podcasts.
Todd Bishop: I want to start with something that’s a little bit more in tune with your own personality, and that is your love of cricket. I actually brought something for you. One of the anecdotes that you tell in the book, “Hit Refresh,” is that when you’re on a conference call, you like to hold a Kookaburra cricket ball. So I went literally to the ends of the Earth to find this thing. They’re not easy to find. Tell us about your love of cricket, what it means to you and how it influences your life as a person and a leader.
Satya Nadella: First of all, thank you so much. The one thing that people have found out because of the book is I love cricket, and so I’ve got a lot of Kookaburra balls now. I really appreciate it. Growing up in India — I would say for South Asians — this very English game has become more than a religion. How it happened, it’s one of those artifacts of history. For me, when I look back, I think it’s true in most team sports.
In fact, the other day, I had the great fortune of going and seeing the Seahawks train, and [Seahawks coach] Pete [Carroll] was explaining how he even sets up the training session. It brought back the memories because some of the coaches I’ve played under and the captains I’ve played under in cricket — I think these team sports grab you and teach you so many lessons. In my case, in the dusty fields of the Deccan Plateau. In fact, that is the place where I played a lot of cricket and then I went back recently, and so I write about the lessons. One of the incidents I recount is a captain I played under. I was a bowler and I was bowling trash that day, so this guy replaces me and takes a wicket — gets us a breakthrough. And then gives the ball back.
That incident has had a lot of influence because, why did he do it? He could have just broken all my confidence, thrown me out of the team, but for some reason, he decided, “You know what? I’m going to give this ball back.” I went on to take more wickets and have a decent season. That ability, that sensibility of what leaders do to bring teams along to do their best work, you can learn from team sport.
Bishop: I know that it also teaches endurance. I believe one of the types of cricket that you like to watch, and perhaps play, is test cricket? Can you explain for this American audience what test cricket is?
Nadella: There’s a huge debate going on in the cricket community, because we now have a version of cricket, which is like baseball. Which I know Americans think is long, but for us, that’s the shortest form of cricket. Whereas, I love the five-day test cricket. It’s like a Russian novel. It’s got plots, subplots and it’s just beautiful. The debate really is: How does that continue in its popularity? Nevertheless, I’m a big fan and I was very clear even with ESPN Cricinfo: If test cricket goes away, they lose one fan at least.
Bishop: You actually got to sit down with ESPN Cricinfo, what was that like? Because I know that was a highlight for you of the tour.
Nadella: It is really fun. I had never been to Lords in London, which is the home of cricket, as they like to call it. I’ve been past it, I’ve watched it on telly a lot of times, but I’d never been in there. So to go to this hallowed ground… it’s one of those other fascinating things that happens, I guess, when people go to places where you’ve read everything about. Cricket has a lot of literature, by the way, around it, and I’ve read everything.
This is one of those places that you walk in after having read about everything for a lifetime and then you see the place, and it was just fun. And then to have an interview … as Frank Shaw, who works with me was telling me, “I don’t know who was more excited, whether the interviewer or I was.” I was really excited about that.
Bishop: Let’s take a look at this picture. Feb. 4, 2014, you were named the third CEO in Microsoft’s history. You’re here with Bill Gates and Steve Balmer, the prior two. What was going through your mind at this point? And what do you wish you could go back and tell that guy in the middle right now about what he was about to face?
Nadella: I am a consummate insider. I grew up in the company that Bill and Steve built. Everything that I’ve learned, everything about me has been shaped by the company I worked for — which is Microsoft — for now 25 years. And obviously, something that wouldn’t have happened but for one of the greatest partnerships in business history, which is the partnership of Bill and Steve.
I distinctly remember that day and leading up to that day, because it was not really long before that day I even knew that I was going to be CEO. The thing that I was seeking the most, and in particular based on all of the people around me, is asking the existential question and being able to answer it for myself. Which is: Why do we as a company exist? You could say, “What a silly way to start,” but I do believe that. I do believe companies exist for a reason. There needs to be a sense of purpose. If there’s going to be long-term success, you can’t be bound by one brand, one product, one technology wave, it’s got to go beyond that because anything that you started with is not going to last forever.
What is that core sense of purpose that can really help drive? Then of course, what’s the culture that will then help you reinforce that sense of purpose with every changing technology wave? Those were the things that, now I see it even three and a half years later — in fact, this entire book came about not as some kind of, “we reached on any destination,” or anything. It’s reflections of a sitting CEO going through that process, that hard process of transformation, which by the way I posit is a continuous process. You’ll never ever reach your destination. How do you keep hitting refresh and being smart about it? I was pretty naïve even three and a half years ago about all of what I at least now know a bit of. All I know is, I know we need to learn a lot more.
Bishop: Looking at this, it strikes me that Bill and Paul — and then Bill and Steve — had each other. There were two partnerships that resulted in this company, really. You don’t have a singular partner. You have what you call in the book a legion of superheroes, the SLT (senior leadership team) as the Microsoft insiders would call it. How has that changed your leadership of the company, the way the company is run and, ultimately, the culture of Microsoft?
Nadella: In fact, Steve was the one who switched me on to this even. Which is, he had once reflected when he was CEO about how even in his tenure and his and Bill’s tenure — as you rightfully said, it was Paul and Bill and then Bill and Steve that built the company — many management teams came and went but they were constant. They could provide that continuity in their own way. And they realized that when the next CEO is going to be in place, the way that CEO will need to operate is going to be very different. And also the business. Especially when I talking to Paul recently is when it struck me: How different the company is than the company that Paul worked at in terms of its scope, its size, its complexity, its operation.
The thing that Steve was, in fact, trying to even do in his own tenure at Microsoft was to build more of a leadership team. For me, of course, it’s an absolute necessity. There is no way I could operate with the context and the depth — I mean, Steve could do pretty much anybody’s job better than anybody. He had such immense intellectual horsepower. I clearly don’t. The thing that I wanted to make sure is [to] bring the team and also have that ownership. “This is our company.” This is not just for the SLT. I want people inside the company to feel it’s their company so that they can use it as a platform to realize their own mission and their own personal philosophy. That’s what I believe applies to the leadership team, as well.
Bishop: You said earlier that you are the consummate insider, and you’ve said in the past that that gave you the credibility — internally — to make change. You were not an outside person coming in to make change. Now, after three and a half years, the stock price has doubled. I recognize you don’t have direct control over the stock price, but that is some external credibility that you’ve gained through your leadership of this company. What do you plan to do with that external credibility? Could you take even bigger bets now on Microsoft’s future given that kind of rope that you’ve got on Wall Street?
Nadella: I think you’re absolutely right. Tech businesses, in particular, are about that constant need to renew themselves by taking big bets. We’ve got this attribute that things all look like failures until they’re not. They’re pretty binary transitions because of these network effects in technology. You’ve got to be able to see things that are changing long before they’re conventional wisdom, take bets and then go after them in a strong way. But at the same time, the market is going to hold you accountable. They want to pass judgment on your judgment. In some sense, it’s rear-view mirror because they’re trying to make sure that you’re able to walk the walk of producing results, and then they will give you permission. You’ve got to get — as I described it, to use a cricketing metaphor — a batting average that is good.
Think about it this way. Here we are 43 years after inception, fighting it out with a whole set of new characters. Not the ones that we competed with 43 years ago, let alone 10 years ago. That, I think, shows that we have that capability — the capability to renew ourselves. We’ll hit some, we’ll miss some, but we’ll keep at it.
I’m very excited about what we’re doing in mixed reality, what we’re doing in AI, what are we going to do even in some really longer-lead things like quantum. By the way, all these efforts didn’t get started three and a half years ago. It’s really Bill who started MSR. It’s Steve how started our cloud push. These are the folks who saw it long before it was conventional wisdom that these are the things that can be successful, and that I think is key. You’re right — as an insider, I’ve been through that journey. But at the same time, I was also very grounded on the things that needed changing.
Bishop: Along those lines, one of the things that struck me about the book — and it’s fun to read a book like this as a reporter who’s been covering the company, because you get the inside information on some of the things you’ve been doing that we’ve been reporting on and you find out what really happens. Apart from the rose petals anecdote, which folks will have to find out about, one of my favorite anecdotes in the book gets directly to this, and that is how you and (Microsoft CFO) Amy Hood decided to re-orient Wall Street. You said, “We’re not going to focus as much on where we are in smartphones. We’re going to set a target: $20 billion in cloud revenue.”
It was an interesting mind exercise that you went through, to try and get Wall Street to look elsewhere. Is that a good approach? Would you give that advice to other CEOs in the audience, to set goals like that and make them externally? Because it’s risky.
Nadella: It’s not about looking elsewhere, but one of the key things that we felt that we needed to make clear — both quite frankly internally and externally— is, what’s the trend that we are really capitalizing on? And how are we winning in that space? That, I think, is going to be very important for the confidence, internally and externally. The reality was most people, even today, view our cloud sometimes narrowly by talking about it as, “Hey, here is your competition with AWS.” That’s one space. But If you look at even our cloud, we have SaaS applications with Office 365. We have business applications with Dynamics 365. We have Azure. we are a believer in distributed infrastructures, so it’s not just Azure. Azure has an edge with Azure Stack.
We wanted to make sure that it is clear, both internally and externally, that we will have a big business here. But most importantly, we will innovate. We’ll serve our customers. So, you’re right, you have to take that risk and it’s our ability to walk that walk, quarter after quarter, that’s really helped Wall Street, in some sense, say, “This is a management team, this is a company, that can, in fact, follow through.” And we’ll never be done. I’ll have another quarterly call in a few weeks and I have to show up with Amy and show our progress. That’s how it is. That’s what’s going to give us permission to keep doing the AI work, the quantum work, the mixed reality work.
But I think that’s what all companies have to do. You’ve got to be able to perform, but you got to also accrue power for the future. One of the major cultural changes we made even in the company was not to fall in love with, essentially, lagging indicators of success, but really fall in love with leading indicators of success. Which is usage, customer satisfaction, come long before revenue and profit. We needed to make sure we are really tracking that, not just what we deliver per quarter.
Bishop: I want to talk about the future of technology, and that portion of the conversation actually starts in an unexpected place, here with your son, Zain. He has cerebral palsy and you write in detail, very candidly, about your early struggles with this. It has totally changed your outlook on the world, on technology, on your life. Walk us through that, if you would.
Nadella: Zain was born when I was 29 years old. His birth, perhaps more than anything else, has shaped a lot of who I am. That was probably one of the harder parts of writing even in the book, to go back and reflect on it in more concrete terms, as to what he has taught me. As a 29-year-old, with both my wife and me — we’re the only children of our parents. So when Zain was about to be born, it was all exciting in the house and we were looking forward to him and the nursery being ready and whether Anu would get back to her work, or how quickly can she get back to her work as an architect. Which she just started. But of course, that night when he was born, everything changed.
He was born, because of in utero asphyxiation, with severe brain damage which has led subsequently to cerebral palsy. Quite frankly, Todd, I struggled with it. I struggled for perhaps multiple years, because the well laid out plans of mine — as a mid-level or even an entry-level engineer at Microsoft — were all out of the window. I needed to recalibrate. I felt, for a long time, “why has this happened to us, and me?”
It’s only by watching my wife who even right after recovering from her C-section was driving Zain up and down the bridges here to get him to therapies and give him the best shot. That’s what, perhaps, really got me out of my stupor and said, “OK, what do I as a father have to do?” Over the years, we’ve been blessed in this community, whether it’s Seattle Children’s Hospital, it’s the physical therapist, the occupational therapist, the speech therapist — the community that we have now around us and the connections, and the role of technology. Zain has gone through many hardships of medical surgeries and what have you. There was even one incident — I remember one day I was sitting, waiting for him to come out of his surgery room, and then all of the equipment around me — a lot of that was Windows. I was saying, “Hey, it’d all better work.”
And it just gave me the feeling and understanding of the responsibility of a platform company, a technology company. Because that’s one of the things that’s very unique about Microsoft, we’re in every power grid. We’re in every hospital. We’re in every critical part of our society and our economy. And we’ve got to take that responsibility very, very seriously.
Bishop: How has it shaped your views on the accessibility of technology and making sure that everyone can access the power of innovation?
Nadella: My personal life, of course, has been a great influence on how I think about the importance of accessibility. But one of the things that I am seeing inside of Microsoft is universal design and accessibility as a real driver of true innovation. I’ll give you a couple of things.
One of the apps that we launched recently, which uses the cutting edge AI in our cloud-run computer vision — it gives anybody with visual impairment the capability to see. In fact, Angela Mills, who is a co-worker of mine whom I had worked with very early on in this part of my Microsoft career, was telling me this story of how she now can go into our cafeteria in Microsoft, order with confidence because she can see the food, read the ingredients, read the menu. She can walk into conference rooms. We have brail readers and what have you, but the issue is she wants to walk into the conference room knowing that that’s the right one, not barge into something that’s not the one that she needs. She can do that now, with confidence. She is able to fully participate. She’s empowered because of AI and will fully participate.
Bishop: This is an app called Seeing AI. It’s for iOS and Android, you can hold it up to the world. It identifies people, it’ll tell you the approximate age of somebody. It’s like a petri dish of AI technologies. It’s really cool.
Nadella: It’s really cool. In fact, we’re going to try and even make it extensible. There is already some extensibility, like it’ll recognize currency. It’s awesome. It gives people more empowerment who need it. Similarly, what we did with Learning Tools. This is again a very passionate group inside of Microsoft who said, we have some amazing technology around reading which now mixed with AI can change the outcomes for kids with dyslexia. Now in Word and OneNote, you have Learning Tools so that kids or anyone with dyslexia can start reading faster, better, comprehend text.
[Former NFL player and ALS advocate] Steve Gleason came to one of our hackathons. Again, a group of passionate people said, “what can we do for an ALS patient who has gaze, eye gaze but all of the other muscles can’t be moved — can they communicate?” We now have in Windows 10 — in fact, in the Fall Creators Update — eye gaze as an input mechanism. I feel one of the things that’s being unlocked is this fundamental recognition that it’s not just about accessibility as AT technology. In fact, we historically even at Microsoft would think of it as, “Oh wow! This is something that you do as assistive technology.”
Bishop: Kind of a niche.
Nadella: As a niche, as something that you do on top of having built the product. But the reality is: The one thing that is true for all of us is, at some point in our life, we all will need some help with some sense of ours. That’s going to be really the universal truth. So we’d better design products so that it can help everybody. That’s what I think we’re trying to invoke and the beauty of it is it’s not some top-down thing, quite frankly. If you look at our hackathons. … We have products teams who are passionate. We have a long distance to cover. What Cortana can mean for accessibility, what mixed reality can mean for accessibility, these are exciting frontiers. I think it’s going to make us a better AI company, a better devices company, a better everything company by focusing in this area.
Bishop: Let’s talk about the future. You identify three trends in the book — mixed reality, quantum computing and artificial intelligence — that are, in your view, going to drive the future. Paint for us, if you will, a picture of that future. What is the world going to be like if these three things come to fruition for our grandkids or perhaps even our grandkids’ grandkids? What are you thinking about now as you’re laying the foundation for that future?
Nadella: One of the most hazardous things to do is speculate in technology about the future. How they manifest in specific terms, I think, will be very path-dependent. It’ll be dependent on where we start. Here’s how I think about it. Take mixed reality. We’ve been on this journey where we’ve been creating these mirror worlds which is, we’ve been trying to create metaphors that we find in the physical space in a digital world. Desktop being a great example of it.
But for the first time, we now have the ability to take what you see and just superimpose, in your field of view, the digital artifact. In other words, the analog and digital medium can merge. You can have a complete immersive experience, that’s what people call virtual reality; or people can, in fact, see the two together, and that’s what people call augmented reality.
Our view is that that’s a dial that you get to set. We’re in the early stages of the devices, but ultimately our dream is that people will have devices which will be like your glasses that you will wear that you can set dials and all computing experiences will be mediated by this new medium.
Now, in order to do that, you really need AI. One of the things that even in the Hololens today is a chip called HPU, or the holographic processing unit. It’s one of the first neural processing units because what it does it understands, spatially, everything that is happening and then is able to this lock of a digital object into real space. That means it solves the computer vision challenge. I think AI is going to be very much part of even bringing forth these new UI metaphors. In fact, I look at what we’re doing with mixed reality as a gaze-first, gesture-first and voice-first interface. You’re not really trying to do keyboard and mouse or touch, but it’s really all about gaze and speech and computer vision. That’s the real AI capability that we want to build.
In AI, I feel one of the challenges we have — we talked about all of the things around Seeing AI or Learning Tools, but even take Cortana. One of the things that I’m most excited about is AI that helps me with my more scarce commodity, which is time. Every day I send lots of emails, get lots of emails. I make, in fact, commitments in email which I forget. But Cortana saves me every day because it tells me, “Oh, you sent mail to Todd saying you’ll follow-up on Thursday” and Thursday comes and it’ll wake up and tell me, “Hey, have you followed up with Todd?”
AI that helps me focus, get more out of my time, that’s what we’re trying to do with something like Cortana. I think that that’s going to be the real currency of our time. I always say, AI can help you stay distracted by engaging a lot more in things that take away time. The more real purpose we need to solve for is: How does AI give you back more time for the things that matter the most to you?
If you say, “Well, this is amazing. We’re going to have this mixed reality future. We’re going to have all this AI.” What’s the one thing that we need more of? It’s computing. In some sense, in spite of all the progress we have made, what is still not solved for — let’s talk about all the computational problems that are not solved. We can’t yet model that natural enzyme in food production. We can’t model the catalyst that can absorb, say, the carbon in the air or build a superconducting material for lossless power transmission. Those are all computational problems. If you try to solve it using a classical computer, they’ll take all the time from the beginning of time to now. Obviously, we don’t have that time. That’s where I think these advances in quantum computing are going to be super important.
I think of these three things — they’re not all the same, they’re not going to be linearly juxtaposed with each other — but I do believe that these three changes are going to be profound in their impact in our lives and in our work.
Bishop: All three of these areas are highly competitive. Microsoft is far from the only company pursuing them. You got two competitors in particular in Google and Apple that have an advantage in that they have their own large base of first-party smartphone hardware users. How much of a disadvantage is it for Microsoft that you don’t have that on the smartphone now? How will you overcome it?
Nadella: It’s a great question. It’s absolutely right. There are 300 million PC sold and there’s a billion smartphones sold. Therein lies, I guess, the math around the high-volume device. I take inspiration, quite frankly, from our own history and how others approached it. There was a time when the only hub for all things was the PC. Until it was not. Today, of course, the conventional wisdom is, “That’s it. This is the last device that you will ever need and want and have, and if you don’t participate in it this second, there is no way.” Except, the two companies you mentioned were born after — or the rebirth at least of Apple came not because of their PC share going up; it was mostly because of what they did with the iPod and the iPhone later.
So the question really is for us: How do we meet the reality of today and then invent our own future? The way I think of that is: First, let’s make sure our software and applications are used on iOS and Android. We want to be first class — after all, most people don’t remember this, but Office was there on the Mac before Windows was even a platform. This is not new to us. We want to go and make sure that whether it’s LinkedIn, whether it’s Skype, whether it is Office, whether it’s Outlook — are used every day. Or our games, Minecraft. We want to make sure, whether it’s gaming or productivity and communications, we do our best work on iOS and Android.
We also want to look at these changes in form function. What is a mobile device today? How is that doing to be shaped? Whether it’s what we did with Surface — after all, as a category with 2-in-1, nobody that there will be such a category. We invented it, we popularized it to the point that now we have good competition. That means we got to keep at it. What’s the next form function change?
Also, what are these new big changes like mixed reality, which in fact put everything up in the air? If you can start seeing your computing in front of you, you’re probably are not going to keep reaching out to your phone as the hub for everything. I feel we’ve got to do our best work and take some bets. Some we will hit, some we won’t, but we’re very, very committed to both making sure that our cloud services are available as great applications on every mobile endpoint and we invent the next set of devices, the next set of form factors with the next set of natural interfaces.
Bishop: Have you given up on smartphone hardware?
Nadella: We absolutely do not have the share to have a smartphone hardware that’s a real consumer choice. That’s I think the reality of it. There’s a lot of press this week suddenly around this. But the reality is that we cannot compete as a third ecosystem, with no share position, and attract developers. So the thing that we’re doing is to make sure that the software is available so that we can service the enterprise customers who really don’t care about a lot of the things that a broad consumer will care about.
It’s one operating system for us. It’s not like we have a phone operating system that is separate from the Xbox operating system, that’s separate from the Windows operating system. It’s one platform. That’s where we are and what we’re now all-in on is to say, “OK, What are we going to do with Surface? How are we going to push the boundaries of what is a PC, even?” And all-in on mixed reality, all-in on gaming, all-in on all of our applications on IOS and Android. That’s how we’re going to go at it.
Bishop: You just asked a good question: What are you going to do on Surface?
Nadella: I’ll tell you, we do have a lot of exciting things that are happening in Surface.
Bishop: Is there any kind of form factor that you’re most interested in that you have not yet entered?
Nadella: [laughing] I’m definitely not going to talk to you about it on the GeekWire stage before I have the device!
Bishop: Just you and me and a few of our friends here.
Nadella: One of the things that again, Steve was the one who really taught us this— was: You’ve got to build the capability. If you think about even the last five years or seven years, the capability we now have. Of being able to build devices. It’s not about the device, it’s the software plus the device. It’s not even just the device as a system. … The fact that we now have that capability to do end to end — as I like to call it, from silicon to cloud — is what now we’ve got to use to innovate new categories. Clearly, category creation is going to be a big part of what we have to do.
Bishop: Yesterday, we had two of Amazon’s top executives — Tony Reid, the head of Echo and Alexa, and Jeff Wilke, the CEO of Amazon’s consumer business. You have a front row seat for a very interesting story in technology, even apart from Microsoft right here in the Seattle region. You’ve been partnering with Amazon, between Cortana and Alexa. What are your observations about Amazon and the growth that they’ve seen?
Nadella: Amazon’s a very impressive company. What Jeff and his team have done is something that, I think, I’ve long admired. I think there’s a lot that we can learn. In fact, the good news is between Microsoft and Amazon, we have a lot of cross-pollination of talent. It’s helpful for this region, by the way, which I think was something that Silicon Valley always had.
When I look at what we’re trying to do with Alexa and Echo, in particular, it’s very straightforward: I want to make sure that at any point in time, the value that we can deliver to customers is not artificially held back because the way to reach them is through someone else’s platform. I felt like one thing I’ve learned at Microsoft is that. Most people don’t think of it that way, but that’s the lesson I learned from what we did with Office on the Macintosh to start with. Cortana is going to be the assistant that helps me with my time, my productivity. That’s going to be the unique skill. There’s no reason why I shouldn’t have that capability if I’m a user of Echo and Alexa. That’s the partnership we have. We’re going to see. These are all about user habits. I’m not a believer in that there’s going to be this one agent. I think each agent is going to have different characteristics, and you should be able to scaffold these agents together. Some of them, after a while of habitual use, will even become automatic. That’s what at least both Jeff and I talked about and that’s what we would hope to see.
Bishop: Will we ever see a Microsoft HQ2, another headquarters somewhere else in North America?
Nadella: We are very, very happy where we are. In fact, one of the things we’re also committed to is what I would say is our development that’s happening in many parts of the world, and many parts of the United States. We have a thriving Silicon Valley office, we just broke ground for a new office there. We have a big office in New York now, we have offices in Boston in Cambridge. Obviously in China and in India. I’m at least in no hurry to talk about any HQ2s. I’m happy with where we are in Redmond.
Bishop: The Amazon example is a good one because it’s emblematic of the approach you’ve changed — and you write about this in detail in that one chapter of the book — with those industry partnerships. Frenemies. You’re competing on some fronts and you’re cooperating on others. What’s the most awkward moments you’ve had? Has it been Salesforce when they disputed your LinkedIn acquisition? And how have you navigated those?
Nadella: I think the fundamental approach I always take is: How can we look at things so that they are non-zero-sum? And recognizing where there is overlap and there is going to be zero-sum competitions. … We are lucky, as a company and as a community in tech, to be in tech. It’s shaping every walk of life, every part of our economy. I think it’ll be really, in some sense, shortsighted to view things inside of our own industry as all zero-sum. That’s at least an attitude that I come out with, and that’s what shapes a lot of [our partnerships].
At the same time, we’re going to compete. We compete with Salesforce in business applications head-on. In fact, we are the disruptor in that space. I’m so excited about what we’re doing with Dynamics in Dynamics 365. It completely changes the business model, the technology, and everything. But at the same time, Salesforce and Office 365, for the users of those two clouds, is great integration. This is something we did in that past, as well, whether it was with Oracle or with SAP.
So I want to just bring that maturity. I feel sometimes what is needed is customer obsession, let’s view things through how they view us versus just our own strategery all the time. And then compete.
Bishop: I can’t believe we haven’t talked about the largest acquisition in Microsoft’s history, which closed less than a year ago: LinkedIn. In our pre-event survey, one of the biggest concerns among attendees was privacy. Data is one of the biggest assets that you acquired through LinkedIn. How can you capitalize most on that data while still being respectful of current and future privacy concerns?
Nadella: I think the entire LinkedIn proposition, franchise, as you said, is built around trust. Trust about the data of LinkedIn and the value LinkedIn provides to the users. That’s of the paramount importance. That’s why, even when there were some concerns about what we would do with it, it’s very clear that we will only do things that the community of LinkedIn gives us permission to do and adds value to them. That’s not our data. It’s the data of the 500 million people who use LinkedIn, who are members of LinkedIn. That’s one of the things that I reinforce at Microsoft: We don’t own data. It’s either the user data or it’s the organizational data. We are essentially entrusted to make it secure, make it private, and make sure that we are there in control and we are very transparent about all of it. Those principles is what guides everything that we do, whether it’s in Office365 or whether it’s on LinkedIn.
That’s one of the things that I reinforce at Microsoft: We don’t own data. It’s either the user data or it’s the organizational data. We are essentially entrusted to make it secure, make it private, and make sure that we are there in control and we are very transparent about all of it. Those principles is what guides everything that we do, whether it’s in Office365 or whether it’s on LinkedIn. If there is value in integration, you have to ask for permission and get that permission. I think that’s where we’re going. Things like GDPR are essentially going to legislate that. Therefore, that’s the world we should build for.
Bishop: Should we expect an acceleration of integration between the companies? We’ve started to see a little bit of it, between LinkedIn and Microsoft, in terms of the products.
Nadella: Yeah, in fact, I feel very, very good. One of my top goals was the re-acceleration of LinkedIn. We’ll talk more about this at the next quarterly earnings. On top of that, the product integrations we announced between Office365 and LinkedIn, between Dynamics365 and LinkedIn — these are there today and our customers benefit from it. In fact, it’s one of those places where we’ve executed super well — on a large acquisition, keeping their ethos, their culture, their value proposition, accelerate that core asset and then add these product integrations. Not exclusively. There could be others who can also do these product integrations. That’s been our strategy.
Bishop: Before we close here, I want to talk about a couple of your personal community initiatives. You are on the board of the Fred Hutchinson Cancer Research Center — [Fred Hutch director] Dr. Gilliland was here yesterday — and also, of course, of Starbucks. [Starbucks CEO] Kevin Johnson was here yesterday. Share with us what you’re hoping to accomplish through those roles.
Nadella: It’s a real privilege to be associated with these iconic organizations in the community. With Starbucks — in fact, Kevin was at Microsoft. I worked for Kevin when he was at Microsoft. I’ve known him, and I’ve gotten to know [former Starbucks CEO] Howard [Schultz]. I’m very, very excited about what Starbucks is doing. Ultimately, it’s about that experience that they are trying to create in using of digital technology. And to be on the board to learn and to contribute, I think that’s fantastic.
What Gary and team are doing at Fred Hutch is just truly inspiring to me. To have even that goal of solving cancer by the turn of the next decade, it’s audacious goal. It’s one of these places where — again, I had not understood it — which is one of the great limiters to even progress in cancer is: How can you take the research that is happening and make it comprehensible in a way so that new hypotheses can be created by the researchers at Fred Hutch and other places? Technology is going to play a huge role. For me, I’m learning so much. Gary is an amazing leader in terms of the organization. He’s got a great team. It’s fantastic to be associated with both of these organizations.
Bishop: As you look to the future, I know that you’re a big fan of poetry. Is there a line or a phrase of poetry that most summarizes your view of the future, personally, and of Microsoft and of the technology industry?
Nadella: It’s fascinating — as we were getting ready to disclose, at out Ignite Conference a few weeks back, some of our quantum efforts, I had a chance to spend a lot of time with Michael Friedman, who’s a Field’s Medal-winning mathematician, who is part of our quantum effort. He was schooling me on a lot of the quantum technology. Being a mathematician, he asked me this question. He said, “Do you know your square roots?” I said, “What?” I think I did. I was not a great student, but I think I know square roots. He said, “Do you know square roots of imaginary numbers?”
I didn’t know where he was going, but it turns out that the square roots of imaginary numbers have a lot to do with quantum computers. But there was this line of poetry I’ve read a couple of years ago by a Pulitzer Prize-winning poet called Vijay Seshadri. It’s called Imaginary Number. And it goes something like this:
“The soul, like the square root of minus 1, is an impossibility that has its uses.”
And I think it just captures I think a lot — that force that’s within that seeks out the unimaginable, that gets us up to solve the impossible, and so there is poetry behind square roots of imaginary numbers.