Nadella said management is refining sales incentives to maximize revenue from traditional workloads, while positioning the company to benefit from the ongoing AI boom.
"You would rather win the new than just protect the past," Nadella told analysts on a conference call.
The past remains healthy. Microsoft still generates around one-fifth of its roughly $262 billion in annual revenue from productivity software, mostly from commercial clients. Windows makes up around 10% of sales.
Meanwhile, the company has used its massive cash pile to orchestrate its three largest acquisitions on record in a little over eight years, snapping up LinkedIn in late 2016, Nuance Communications in 2022 and Activision Blizzard in 2023, for a combined $121 billion.
There's some optimism that the Trump administration and a new head of the Federal Trade Commission will open up the door to the kinds of deal-making that proved very challenging during Joe Biden's presidency, when Lina Khan headed the FTC.
But regulatory uncertainty remains.
It's not a new risk for Microsoft. In 1995, the company paid a $46 million breakup fee to tax software maker Intuit after the Justice Department filed suit to block the proposed deal. Years later, the DOJ got Microsoft to revamp some of its practices after a landmark antitrust case.
The U.S. isn't the only concern. The U.K.'s Competition and Markets Authority said in January that an independent inquiry found that "Microsoft is using its strong position in software to make it harder for AWS and Google to compete effectively for cloud customers that wish to use Microsoft software on the cloud."
Microsoft last year committed to unbundling Teams from Microsoft 365 productivity software subscriptions globally to address concerns from the European Union's executive arm, the European Commission.
Fairly early in Microsoft's history the company became the world's largest software maker. And in cloud, Microsoft is the biggest challenger to AWS. Most of the company's revenue comes from corporations, schools and governments.
But Microsoft is in other markets where its position is weaker. Those include video games, laptops and search advertising.
Mary Jo Foley, editor in chief at advisory group Directions on Microsoft, said the company may be better off focusing on what it does best, rather than continuing to offer Xbox consoles and Surface tablets.
"Microsoft is not good at anything in the consumer space (with the possible exception of gaming)," wrote Foley, who has covered the company on and off since 1984. "You're wasting time and money on trying to figure it out. Microsoft is an enterprise company — and that is more than OK."
This AI dominance at national and corporate levels threatens to widen those technological divides, leaving many nations at risk of lagging behind, UNCTAD said. It noted that 118 countries — mostly in the Global South — are absent from major AI governance discussions.
UN recommendations
But AI is not just about job replacement, the report said, noting that it can also "create new industries and and empower workers" — provided there is adequate investment in reskilling and upskilling.
But in order for developing nations not to fall behind, they must "have a seat at the table" when it comes to AI regulation and ethical frameworks, it said.
In its report, UNCTAD makes a number of recommendations to the international community for driving inclusive growth. They include an AI public disclosure mechanism, shared AI infrastructure, the use of open-source AI models and initiatives to share AI knowledge and resources.
Nadella said management is refining sales incentives to maximize revenue from traditional workloads, while positioning the company to benefit from the ongoing AI boom.
"You would rather win the new than just protect the past," Nadella told analysts on a conference call.
The past remains healthy. Microsoft still generates around one-fifth of its roughly $262 billion in annual revenue from productivity software, mostly from commercial clients. Windows makes up around 10% of sales.
Meanwhile, the company has used its massive cash pile to orchestrate its three largest acquisitions on record in a little over eight years, snapping up LinkedIn in late 2016, Nuance Communications in 2022 and Activision Blizzard in 2023, for a combined $121 billion.
!summarize #tesla #stock #automotive
There's some optimism that the Trump administration and a new head of the Federal Trade Commission will open up the door to the kinds of deal-making that proved very challenging during Joe Biden's presidency, when Lina Khan headed the FTC.
But regulatory uncertainty remains.
It's not a new risk for Microsoft. In 1995, the company paid a $46 million breakup fee to tax software maker Intuit after the Justice Department filed suit to block the proposed deal. Years later, the DOJ got Microsoft to revamp some of its practices after a landmark antitrust case.
The U.S. isn't the only concern. The U.K.'s Competition and Markets Authority said in January that an independent inquiry found that "Microsoft is using its strong position in software to make it harder for AWS and Google to compete effectively for cloud customers that wish to use Microsoft software on the cloud."
Microsoft last year committed to unbundling Teams from Microsoft 365 productivity software subscriptions globally to address concerns from the European Union's executive arm, the European Commission.
Fairly early in Microsoft's history the company became the world's largest software maker. And in cloud, Microsoft is the biggest challenger to AWS. Most of the company's revenue comes from corporations, schools and governments.
But Microsoft is in other markets where its position is weaker. Those include video games, laptops and search advertising.
Mary Jo Foley, editor in chief at advisory group Directions on Microsoft, said the company may be better off focusing on what it does best, rather than continuing to offer Xbox consoles and Surface tablets.
"Microsoft is not good at anything in the consumer space (with the possible exception of gaming)," wrote Foley, who has covered the company on and off since 1984. "You're wasting time and money on trying to figure it out. Microsoft is an enterprise company — and that is more than OK."
This AI dominance at national and corporate levels threatens to widen those technological divides, leaving many nations at risk of lagging behind, UNCTAD said. It noted that 118 countries — mostly in the Global South — are absent from major AI governance discussions.
UN recommendations
But AI is not just about job replacement, the report said, noting that it can also "create new industries and and empower workers" — provided there is adequate investment in reskilling and upskilling.
But in order for developing nations not to fall behind, they must "have a seat at the table" when it comes to AI regulation and ethical frameworks, it said.
In its report, UNCTAD makes a number of recommendations to the international community for driving inclusive growth. They include an AI public disclosure mechanism, shared AI infrastructure, the use of open-source AI models and initiatives to share AI knowledge and resources.
"We're in a global race in AI," Gerstner said. "We can't hamper our ability to win that race."