HITS

Cloud adoption and interest in artificial intelligence (AI) among customers remains strong and keep increasing, according to Julia White, corporate VP of Azure Marketing at Microsoft.

“In general, the cloud adoption is great and it’s definitely growing and we’re moving into even kind of late-stage adopters” now, she said Feb. 12 at the Goldman Sachs Technology and Internet Conference in San Francisco.

But she said: “The percentage of the IT [sector] and the applications being built and migrated [to the] cloud is still pretty small. We still have a lot more to go. So, while most companies today have some workloads [in the cloud] or they’re migrating to the cloud or building new in the cloud, it’s still not the majority of what they’re running.”

There are, however, a couple of things that have changed, she noted. For example, she told attendees: “We definitely have moved from seeing kind of the mid-tier and early adopters moving into cloud and getting kind of their first workloads into the cloud, into even [now seeing] the very late-stage adopters … . In the past year, we’ve had some conversations — really basic cloud conversations all over again because this next wave of adopters is starting to come in.”

In addition, she said, the “level of sophistication in what’s migrated” to the cloud has increased, but “it’s still early.”

Microsoft sees “a ton of opportunity” in the class of higher-level data services, so “that part of the Azure business is incredibly healthy,” she pointed out.

While moving to the cloud, meanwhile, “one of the biggest problems” that customers are “trying to solve is around their data,” including analytical and operational data, she told attendees.

In particular, “everyone has an AI strategy – everybody,” she said. However, although many people feel like they have to incorporate AI now, they often soon realize they don’t have enough data for effective AI implementation and their analytics systems are too old, she noted. So then, those customers realize they must “pivot to” working to improve their analytics, “so that part of our cloud growth is phenomenal,” she said.

During the Q&A, she pointed out that many customers are still excited about AI, adding: “If I look at our executive briefing center, AI is the number one conversation customers want to come have with us.”
Microsoft is seeing “a lot of adoption of … pre-built” AI models by Microsoft that can be used in customers’ applications, she said. At the same time, there’s also “more sophisticated” instances where customers want to build their own AI models to power their supply chains or “predict customer behavior and that’s where you need to get into data scientists who are going to be using their specialized compute to be able to process and run those kind of algorithms and high fidelity,” she told attendees.

“That’s a much more complicated conversation — and it tends to start with the dream of doing it, but they don’t have the data scientists; they don’t quite know what they want to do yet,” she explained, adding: “That tends to be much more about analytics, getting the data science basics and then taking advantage of the compute that we have available for it.”

Also discussed during the presentation was the Azure Hybrid Benefit plan for Windows Server and SQL Server customers. That program, now in its second year, presents a “fantastic advantage” because it “gives on-premises customers and the buyers of Windows [Server] and SQL kind of insurance plans because most people know they want to go to the cloud in the next generation and it obviously gives Azure a wonderful price advantage in terms of being able to run it with the same IP that you’ve already bought.”

That’s because Azure Hybrid Benefit lets Windows Server and SQL Server customers migrate their workloads to Azure using their on-premises licenses, she noted, adding awareness and adoption have been growing for it in the past year or so.

During the Q&A, she also pushed back on the perception among some people that Azure doesn’t have many small business customers. “We’re actually very equally distributed across small business, kind of mid-sized enterprise and large enterprise from a consumed revenue perspective – maybe more balanced than people might think,” she said.