The Cloud Will Boost Economic Growth Amid Economic Turmoil

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Soaring inflation and rising interest rates are causing economic turmoil around the world. In this challenging environment, Microsoft (MSFT) CEO Satya Nadella says cloud technology can help businesses “do more” with fewer resources than before.

“Globally, we certainly see constraints in the macro environment that have customers, and basically everyone, asking the question, ‘How do we drive productivity? Monday, October 17 from 9 a.m. EST to 5 p.m. EST. “When we think about software and technology, it is, in a sense, show time to enable any business to do more with less.”

Cloud computing, which allows businesses to remotely access hardware and services over the Internet, has been on the rise for years. Microsoft controls 21% of the global cloud market, which puts it behind the 39% market share of Amazon (AMZN), but ahead of Google and its 7% market share.

In 2019, Microsoft’s Intelligent Cloud business generated $38.9 billion of the company’s $125.8 billion in total revenue, or about 30%. The global pandemic has reinforced the need for businesses to deploy cloud platforms so they can operate without disruption. As a result, in 2021, Microsoft’s cloud revenue accounted for $60.1 billion of the company’s $168.1 billion in total revenue, or nearly 36%.

Microsoft Chairman and CEO Satya Nadella speaks with Dan Howley of Yahoo Finance.

“Cloud migrations have been extremely critical during the pandemic, even for resiliency,” Nadella said. “And now, if you’re not at the frontier of cloud costs, you’re behind in productivity. If you’re not at the frontier of cloud-native application efficiency, you’re falling behind in productivity. If you’re not able to use hybrid workplace infrastructure to get everyone to participate collaboratively in the organization, you’re falling behind.

“Software is ultimately the biggest deflationary force companies can use”

As businesses look for ways to cut costs, Nadella says the cloud could help them save money. It would also help Microsoft’s bottom line if they turned to Nadella’s company for those services.

By subscribing to cloud versions of software like Office, companies can save on the significant expense of individual software licenses for each employee. And by using Microsoft’s infrastructure-as-a-service offerings, businesses can eliminate the need for their own on-premises hardware.

“All of the macroeconomic headwinds that we all face – none of us are immune – the tailwind that we have, at least as a business, is our ability to deliver these solutions. Software is ultimately the biggest deflationary force companies can use,” he explained.

Europe in particular stands to gain from the cloud, Nadella said. European countries are looking for ways to save on infrastructure as they face an energy crisis caused by war in Ukraine.

“If you move to the cloud, by definition you have the most efficient use of the scarce energy resource,” he explained. “Second, let’s take a manufacturing plant. If you are creating a digital twin of a manufacturing plant, one of the benefits is that you can make it more energy efficient, because you can do the simulation to make the most efficient energy consumption. In fact, you can also reduce waste. So overall, things of that nature, I think, are going to increase productivity.

Microsoft is not immune to economic forces hitting its customers, including chemical company Dow Inc. and Twitter. Nadella says the company uses its own products to improve overall efficiency.

“We apply it ourselves inside. How can we be more efficient, whether it’s in our people operations or our R&D, or whether it’s our finance or our supply chain?” Nadella said. “So I think you’ll see us…taking our own solutions and deploy them as efficiently as possible to drive productivity and leverage operating expense and capital efficiency, capital savings. »

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