Here at the dawn of Satya Nadella’s second decade as Microsoft CEO, I have to wonder if even Nadella — the world’s top-performing CEO — can possibly match or exceed what he’s achieved in his first 10 years shaping and driving the world’s largest and most-influential cloud and artificial intelligence (AI) company.
For Nadella’s first quarterly earnings release as CEO back in April 2014, Microsoft still had a big focus on “Home” products and Windows, but as shown in this slide from the earnings presentation, the success of the company’s cloud business was accelerating:
And this quote from Nadella in the earnings release from almost 10 years ago shows the oncoming momentum of the Microsoft cloud, a unit that Nadella led prior to his promotion to CEO: “This quarter’s results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world. We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth. We are focused on executing rapidly and delivering bold, innovative products that people love to use.”
As it turns out, those “opportunities” in a “mobile-first, cloud-first” world have blossomed quite nicely, and Nadella is now leading Microsoft into the complementary but wildly more ambitious AI-first world.
And as that new AI adventure unfolds, so too does Nadella’s second decade as CEO. Although Nadella comes across as soft-spoken and somewhat gentle, that superficial perspective belies an unshakable vision, hard-earned confidence, and fierce competitive spirit.
Take a look at what Microsoft has achieved in Nadella’s first decade:
From “Cloud-First” to Cloud Dominates: For the quarter ended Dec. 31, cloud revenue accounted for 54% of Microsoft’s total revenue of $62 billion. A decade ago, it was relatively easy for Nadella to express that “cloud-first” aspiration — but it has been a masterstroke of leadership and commitment and vision to actually turn that into a stunning reality.
Market Cap: With a market cap of just over $3 trillion, Microsoft is pretty much tied with Apple as the world’s most valuable corporation. But when Nadella took over as CEO from Steve Ballmer 10 years ago on Feb. 4, 2014, Microsoft’s market cap was $256.1 billion. So with Nadella as CEO, Microsoft’s value has gone up by a staggering 11.8X.
Cloud Revenue: Microsoft is far and away the world’s largest and most-influential cloud provider, and has been #1 on my Cloud Wars Top 10 list for more than 4 years. For its fiscal Q2 ended Dec. 31, cloud revenue jumped 24% to $33.7 billion, which is 40% — 40%!! — larger than the revenue of AWS, which some whizzes still for some reason refer to as “the cloud leader.”
Cloud Growth Rate: If anybody out there knows of a company operating at that scale with a growth rate above 20%, please let me know. And while its cloud-revenue base keeps getting bigger and bigger, the company somehow manages to find a way to maintain a relatively consistently lusty level of cloud growth, as shown in this list of growth rates for its last six quarters: 24%, 22%, 22%, 21%, 24%, 24%. Simply extraordinary.
Groundbreaking Partnerships: Nadella has pioneered or expanded strategic partnerships with most of the Cloud Wars Top 10 companies: Oracle, SAP, ServiceNow, Workday, IBM, Snowflake, and even Salesforce. While each is significant in its own way, the most-remarkable to me is the unprecedented multicloud partnership with Oracle, under which Microsoft Azure customers can procure, run, and manage the Oracle Database via Azure! You can get the full story on that in “The Larry and Satya Show: Microsoft, Oracle Rewire the Business World” and in “Microsoft Cloud Shocker: Oracle Major Driver behind Blowout Q1 Numbers!“
Powerful, Elegant Vision: Nadella led off last week’s earnings-call commentary with this: “We’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains.” Not overly flowery, clear, customer-oriented, and intimately fused with the thinking of the time.
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Final Thought
I doubt that Satya Nadella has given even a microsecond’s thought to, ‘Gee, how can I top my first decade?’ But that’s part of what makes this industry so fascinating: It is led by people who are doers and achievers, not slick gum-flappers.
And while mere mortals like me might be stumped to think of how Microsoft and Nadella can top his first decade in the next 10 years, I suspect that within the next couple of years, we’ll all begin to get some pretty clear indications that the adventure — as wild as it’s been — is only just beginning.
Well done, Satya Nadella!
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