Satya Nadella keynote Build 2018
Satya Nadella delivers the keynote at Build 2018 held at the Washington State Convention Center in Seattle.

CEO Satya Nadella kicked off Microsoft's Build 2018 event by reviving his refrain from Build 2017, "intelligent cloud and intelligent edge." Over 6000 developers gathered in Seattle from May 7 to May 9 to hear announcements, watch demonstrations and listen to Microsoft's vision for the future. Throughout all, Microsoft strove to show how far it has come in creating services for a new era.

One noticeable absence was symbolic of this new era: 2018 marked the first year in Build history without a Windows keynote. Rather, the keynotes focused on the company's development platforms for artificial intelligence (AI) and the internet of things (IoT): Microsoft 365 and Azure. 

Developer Vision: The World as a Computer

Microsoft sees the acceleration of computing and the proliferation of smart devices in homes, factories and businesses opening up opportunities for a wide variety of devices to see, listen, reason and predict without needing constant connections to the cloud. Through the intelligent cloud and intelligent edge, the world itself becomes a computer.

Nadella suggested developers will wield power in this future, but will also have a large responsibility to ensure the privacy and security of data, and the ethical use of artificial intelligence. Microsoft sees these topics as its core differentiators.

Microsoft is building the Azure platform to become "the world's computer" based on four pillars: Azure public cloud; Azure Stack, its hybrid cloud solution; Azure Sphere, its chip-to-cloud security platform for the internet of things; and Azure IoT Edge, which enables low-power devices to run containers and perform artificial intelligence locally but retain a connection to the cloud for management and model training.

Internet of Things and the Intelligent Edge

In the internet of things, Microsoft announced it is open-sourcing its Azure IoT Edge runtime, a toolkit that brings artificial intelligence, Azure services and custom apps to internet of things devices. The move is designed to encourage more activity in the open-source developer community in GitHub, to which Microsoft is now one of the largest contributors.

The company also announced its custom cognitive vision service will now run on Azure IoT Edge to allow devices such as drones and industrial equipment to incorporate embedded video processing and analysis without cloud connectivity.

Other leading announcements in this area involved several agreements with other firms, including drone-maker DJI, and silicon suppliers Qualcomm and NXP Semiconductors.

Artificial Intelligence

AI was again a major theme at the conference. Nadella stated that the event's mission was to help every developer be an artificial intelligence developer. This aligns with our prediction that by 2020 developer focus will shift from operating systems to artificial intelligence platforms as developers increasingly look to cognitive services that span all devices, including the internet of things.

Microsoft announced Project Kinect for Azure, which builds on the company's work with Kinect depth sensors in gaming since 2010. Other announcements focused on improvements to its Cognitive Services; a preview of Project Brainwave, an architecture for deep neural networks; an update on deeper integrations between Microsoft Cortana and Amazon's Alexa; and the unveiling of AI for Accessibility, a $25 million, five-year program to build technology to support the 1 billion people around the world with disabilities.

Microsoft's strategy in artificial intelligence has improved rapidly over the past 12 months and Build showcased the speed of this progress. Enterprise requirements for artificial intelligence solutions have changed rapidly in that time. They need greater customization, simplified development, improved performance and deployment in a range of distributed scenarios, including offline, high-grade security and on premises environments and on low-power internet of things devices, for example. Microsoft's moves reflect many of these changes.

In our view, requirements will soon advance further, from perception-based needs toward cognition-based artificial intelligence. This will require developer services such as multi-turn, conversational intelligence (rather than the command-and-control voice of today), anomaly detection, and more domain- or enterprise-specific services such as predictive maintenance, process automation, dynamic pricing, compliance or fraud detection. Systems based on homomorphic encryption, in which artificial intelligence can be trained with encrypted data, will be another area of opportunity.

Mixed Reality

In mixed reality, Microsoft launched Remote Assist for first-line workers and Microsoft Layout. Remote Assist enables hands-free working using HoloLens and Teams for remote assistance and repair scenarios. Layout allows the design of spaces in mixed reality, and lets users collaborate in real time.

In identifying where mixed-reality technology can optimize specific business processes, Microsoft is in a better place to demonstrate its value. However, it will need to work with customers to improve the quality of their data as well as improve bandwidth constraints, which can undermine the experience of HoloLens.

Microsoft 365

Microsoft 365 took center stage on day two. Microsoft 365 is the integration of Windows 10, Office 365 and Enterprise Mobility and Security, which formed the basis of a large reorganization earlier in 2018. 

The core of Microsoft 365's developer vision is putting "people at the center, not devices" and enabling "multisense and multidevice experiences" using the Microsoft Graph and other assets. Microsoft Graph enables content and activities to move fluidly between devices and therefore acts as the glue between Android, iOS and Windows 10. In this respect, Graph is becoming one of the most critical parts of the firm's long-term relevance to developers beyond Windows hardware.

The event saw several new capabilities that enable this strategy. The Your Phone app creates a window into a user's phone on a PC to access messages, photos and notifications. The Microsoft Launcher app on Android supports Timeline for cross-device app launching, and the Edge browser now supports Timeline for iOS devices. Windows Sets, which will enable a PC to remember where users left off when they switch devices, will be made available as a Universal Windows Platform application when it launches. And Microsoft 365 now supports Adaptive Cards to allow for interactive messages and transactions within apps, bots or services in Teams and Office 365.

Nadella revealed Microsoft 365 at the company's Inspire conference in July 2017, so it is still very early days for Microsoft 365 among the developer community. But Build 2018 achieved Microsoft's central aim: showing developers the value and opportunity in the integrated offering. However, it still has work to do to simplify the complexity in building for mixed reality and cross-device applications that incorporate the PC. Like the internet of things and artificial intelligence-based applications, developer sophistication with these concepts is low and Microsoft must educate and simplify the process for building these next-generation applications over the next 12 months.

The Road Ahead for Microsoft

Critics have argued that the sun is setting on Microsoft's credibility with developers, especially compared with its heyday of PC dominance, because it missed the smartphone revolution and does not have a consumer digital speaker product. But critics overlook that artificial intelligence, cloud and edge computing have not only replaced Windows as the principal platform for developers, but that these concepts represent a much more attractive long-term option for developers than mobile, PCs or smart speakers on their own.

Above all, Build 2018 revealed a more open and ethically aware Microsoft. But the road ahead will not be smooth. Google and Amazon are formidable long-term competitors for developer audiences, and are not standing still, especially when it comes to AI and IoT.

Over the next 12 months, Microsoft needs to see many enterprise developers building artificial intelligence and internet of things applications in Azure. It must remove the complexities in creating multisense, multidevice apps for the new Microsoft 365 framework. An improvement in how the market understands the Microsoft Graph, both its value and limitations, will be crucial to both. Execution must now be Microsoft's priority.