Microsoft has Expansionist Intention and Others Should Feel Scared
Satya Nadella keeps wanting more. In February, Nadella sat for an interview with The Verge after announcing the new version of their Bing search engine. The Hyderabad-native expressed his admiration for Google, the definitive search engine, saying what he really wanted was for Pichai and co. to ‘come out and show that they can dance’. A decade ago—after people were writing off the tech giant as a dinosaur of bygone times—Nadella’s appointment in 2014 switched things up. The 2023 Microsoft is doing a lot and doing it everywhere. Microsoft in Enterprise Microsoft’s productivity tools and business processes segment made USD 15.9 billion in revenue in the second-quarter of FY 2022, which comprised 31% of the company’s total revenue. This amounted to an increase of 19.3% from the quarter a year earlier and Microsoft is pushing it harder to squeeze out more money in this segment. Just last week, the company unveiled a new Dynamics 365 Copilot which will integrate a generative AI chatbot for their users to be able to draft emails, summarise their Teams meetings and build marketing and sales campaigns. Since Microsoft’s multi-year investment in OpenAI, the tech giant has been pushing the Sam Altman-led startup’s generative AI tools into all its services. While Microsoft has already been crowding an already busy ERP and CRM segment with competitors like Salesforce, the generative AI twist has added more heat. Days later, Marc Benioff’s Salesforce was forced to announce a partnership with who else but OpenAI. Called Einstein GPT, the software will help salespersons, customer service agents and marketers. Microsoft also bought LinkedIn for a hefty USD 26 billion in 2016 after Nadella took over. Microsoft in Search A couple of days ago, Microsoft’s search engine ‘Bing’ crossed the 100 million daily active users mark just a month after the launch of its AI-powered Bing chat. This is only a miniscule fraction of Google’s more than a billion daily active users but the steady growth is enough to make the search giant “dance” as Nadella promised. The search and chatting experience package is giving Microsoft a competitive edge for now. Google is only lagging behind slightly compared to Microsoft as it also announced its AI chatbot called ‘Bard’ last month. Bard’s grand debut was marred by a misinformation flub, forcing the company to delay its availability until it is ready. In a blog post sharing the happy news, Microsoft’s head of consumer marketing, Yusuf Mehdi also stated that Microsoft Edge had also helped push Bing. Microsoft is known to constantly send its Edge updates and Windows updates while even prompting users to not download Google Chrome. While not every story around Bing is flattering, users are mostly entertained by its at times wild responses. As long as it’s not taken too seriously, Microsoft is also gunning after revenue from the ad market. Last month, the company’s CVP of finance laid out plans showing how the company planned to grow its digital ad revenue to around USD 500 billion. Notably, Microsoft’s advertising business has already grown to USD 18 billion in revenue over the year as compared to USD 10 billion in the past fiscal year. While Google did make USD 200 billion in advertising revenue last year, let’s not forget that Google is heavily reliant on its search business and its portfolio isn’t nearly as diversified as Microsoft’s. Microsoft in Cloud Microsoft’s cloud business may not be as critical to the company as AWS is to Amazon but the segment is a serious money-maker in every way. Just like AWS, Azure has seen a whopping growth over the past decade with its second-quarter 2022 revenue from Intelligent Cloud standing at USD 18.3 billion—35% of its total revenue. Following its launch in 2010, Microsoft’s Intelligent Cloud segment included other cloud services like SQL Server, Windows Server and Visual Studio. The services include data storage, databases, networking, web and mobile applications. Where AWS is expected to plateau soon and Google Cloud is still struggling to meet profitability, Microsoft Azure can have a competitive advantage because of its massive customer base. Azure also covers 60 geographical regions globally, which is far bigger than AWS and Google Cloud both of which have half as much. Gaming The dramatic saga of Microsoft’s proposed acquisition of Activision Blizzard could bring it big money from the Call of Duty games. Last reported by Reuters, the USD 68.7 billion deal is likely to be approved by EU regulators. For the first time in a long time, it looks like Microsoft isn’t the one chasing but is rather giving others a run for their money. Just last month, in an interview with Product Lead at Roblox Peter Yang, Microsoft VP Product for Microsoft Teams, Amit Fulay, spoke about how much Microsoft had changed under Nadella. Fulay, who had formerly worked at the software giant, had re-joined after 13 years. So, what was the difference? ‘If I can sum it up in one line—Microsoft no longer has hubris.’
While Microsoft has already been crowding an already busy ERP and CRM segment with competitors like Salesforce, the generative AI twist has added more heat.
Microsoft keeps wanting more and is exploring new businesses expanding from Search to Design
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["Go", "AWS", "OpenAI", "AI", "R", "Git", "RAG", "generative AI", "SQL", "Azure"]
["AI", "generative AI", "OpenAI", "RAG", "AWS", "Azure", "R", "SQL", "Go", "Git"]
Poulomi is a Technology Journalist with Analytics India Magazine. Her fascination with tech and eagerness to dive into new areas led her to the dynamic world of AI and data analytics.