Over 30,000 IT pros, business leaders and partners gathered in Orlando, Fla. last week to attend Microsoft Ignite and Envision, its annual business and technology customer events. The gathering revealed a wide range of developments in cloud computing, security, edge computing, artificial intelligence and modern workplace.
But with these advancements comes a challenge for Microsoft in its battle for cloud supremacy against Amazon and Google: how to bridge the gap in pace between itself and many of its customers and partners who need help deploying all of its services on offer.
Let's take a look at the major themes and assess what they mean for Microsoft and the market.
In August, Satya Nadella famously declared: “You join Microsoft not to be cool, but to make others cool.” The opening keynote doubled down on its belief that, unlike other cloud providers who compete with customers, Microsoft’s role is to help customers become tech companies themselves.
Nadella introduced the concept of "tech intensity" — an ethos driving companies to adopt technology quickly, break down silos, change culture and build up their digital capabilities. Microsoft customers Shell, Walmart, BMW and others were held up as examples of tech intensity in practice.
Nadella was also joined on stage by Adobe CEO Shantanu Narayen and SAP CEP Bill McDermott to announce the Open Data Initiative. This open alliance between cloud service suppliers hopes to open up customer data locked in separate applications to artificial intelligence systems and improve the customer experience.
Although details are light at this stage, implementing standards to make data more extensible is a move in the right direction for customers and will certainly put pressure on Google and Salesforce, currently missing from the project.
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Doubling Down on Security and Trust
Nadella's keynote was also his strongest in over three years on the topics of security and trust — and both of these topics became the lead themes of Ignite 2018. Following a big year in security, Microsoft announced a host of largely iterative improvements in the areas of password-less logins, cybersecurity report cards, confidential computing and administration. It also announced AccountGuard, which aims to protect political campaigns from hacking, improve security and defend against disinformation.
The fact that Ignite doubled down on the themes of security and trust underlines Microsoft's growing leadership in these areas. After a year of cyberattacks, the Cambridge Analytica scandal and an increase in negative public sentiment toward large technology companies, Microsoft is starting to set itself apart in this area.
Nadella stated that Microsoft's 3,500 security employees analyze more than 6.5 trillion signals a day using the company's machine learning tools; its Cyber Defense Operations Center blocks more than 5 billion malware threats a month; and its digital crimes unit, working with law enforcement agencies around the globe, has taken down 18 criminal botnets in 2018.
In our view, trust has now become the new battleground of the technology industry in 2018, as important a differentiator as product innovation and developer ecosystems have been in the past. Microsoft has been among the first to acknowledge this and its efforts are paying off. According to our 2018 employee technology survey fielded this summer, Microsoft is the brand that employees trust most to protect company data. It also received the highest net increase in trust among employees, beating other brands like Google, Amazon, Apple and IBM in our survey.
As I have stated many times, trust is now the new tech battlefield, as important as developer ecosystems & product innovation. Facebook’s breach yesterday shows us it is not only facing a possible $1.7bn+ EU GDPR fine, but that it has big work to do https://t.co/TEYarmZr9j pic.twitter.com/kz0A2LBQgX— Nicholas McQuire (@nickmcquire) September 29, 2018
Artificial Intelligence and Data Remain a Big Focus
Artificial intelligence was a big focus at Ignite 2017, and 2018 was no different. Several announcements focussed on democratizing the technology, on products for developers and AI-infused experiences in Microsoft 365, as well as a host of improvements to its data tools in its SQL Server and Azure products.
The lead announcement was Microsoft's AI for Humanitarian Action, a $40 million, five-year program that will see Microsoft offering grants and technology tools to nongovernment organizations performing disaster recovery and protecting children, refugees and displaced people.
Another important development was in Microsoft's Cognitive Services portfolio, a set of 15 standard machine learning models and APIs for speech, vision, language and search functions for developers building AI applications. Microsoft reported that 1.2 million developers now use its AI services, including more than 340,000 developers using its Bot Framework.
AI is at the epicenter of a current arms race taking place amongst the cloud vendors and Microsoft’s strong traction with its developer community gives it unique advantages. But it will need to turn its focus beyond general purpose AI technologies to place more effort on applied AI and applications for businesses. Offering more ways to deploy its AI services will also help, such as with encrypted data, or in offline, hybrid or container scenarios. The firm has opportunities to exploit emerging areas of AI such as security for machine learning models and data as well.
Digging Deeper Into IoT and Edge Computing
Microsoft's main corporate vision over the past year has focused on the "intelligent cloud and intelligent edge." At the heart of this is the acceleration of computational processing and the proliferation of smart devices in homes, factories and businesses that have the ability to see, listen, reason and predict without needing constant connections to the cloud.
Nadella declared at Build earlier this year that thanks to the intelligent cloud and intelligent edge, “the world is becoming a computer,” with a ubiquitous computing fabric from the cloud to on-premises data centers to internet of things devices at the network edge. AI spans these environments to analyze the data that devices generate.
Ignite revealed more than 15 announcements relating to IoT and edge computing, further proof of Microsoft's massive commitment to the fields following its announcement in April of a $5 billion increase in investment over the next four years. Many of the announcements are progressive developments of existing features, but others, like Azure Digital Twins, which enables customers to create a comprehensive digital model of any physical environment with the connected things operating within it, are genuine innovations and a broader view than most suppliers offer.
Related Article: Build 2018 Showcases Microsoft's Progress
Microsoft's View of the Modern Workplace
Microsoft’s modern workplace was also a key focus. According to Microsoft, Microsoft 365 is now a multibillion dollar business, with over 135 million commercial monthly Office 365 users, 200 million commercial Windows 10 devices in use and 82 million Enterprise Mobility and Security customers.
The showcase was Teams, which saw a host of improvements. Teams is now the hub of employee collaboration and productivity in the Microsoft portfolio as well as the fastest-growing business application in the company's history. The company reported 329,000 organizations now use the product and in the past six months, it has added almost 130,000 new customers, largely thanks to the release of a free version earlier this year.
Another interesting move was the further steps the company took to integrate LinkedIn by connecting Office 365 and LinkedIn accounts. This will allow users to send emails and share documents with first-degree connections from Office 365 as well as enable people to see LinkedIn information on meeting attendees directly in meeting invites.
Finally, Microsoft also improved upon some recent announcements in its Windows 10 and modern desktop strategy to align with its vision of the modern workplace. It unveiled Windows Virtual Desktop, a public cloud-based virtual desktop and application service that runs in Azure and competes with Amazon Workspaces, VMware and Citrix.
Microsoft has become the single biggest force shaping the enterprise end user computing market at the moment. The announcements relating to its Windows 10 and desktop strategy in particular will not only raise the pulses of competitors Amazon Web Services, Google and VMware, but also have the potential to disrupt the industry as well.
Related Article: Microsoft Teams: The Good, The Bad, The 'Is it Ready?'
The Broader Ignite Takeaways
Above all, Ignite revealed Microsoft's rapid ascent as a dominant enterprise cloud platform. No other player has such an enviable "flywheel" effect, both financially and strategically, of a tightly aligned and accelerating cloud infrastructure, security and applications businesses.
An innovative culture has emerged in Redmond as well, the fruits of which were on show at Ignite but which date back to the critical organizational decisions Nadella took when he became CEO in 2014. It is this culture that companies like Buhler, Shell and Walmart trust, and that is moving Microsoft at a rapid pace — perhaps faster than any other firm of its size.
Although this pace has generated real progress in cloud and edge computing, artificial intelligence, security and the modern workplace, Microsoft will have to work harder to bring many of its customers up to the same speed. Nadella spoke of "tech intensity" to encourage customers to move faster, but the company needs to do more to help customers adopt and gain value from all the Microsoft services on offer. We believe its customer experience division and investment in its FastTrack program across the portfolio — along similar lines to Salesforce's Trailhead initiative — will become crucial moving forward.
Microsoft will also need to train partners and elevate the role they play in its strategy. Both Amazon and Google have been more communicative in this area in our view.
Lastly, Microsoft will need to remove the complexities in its "multisense multidevice" vision to better attract enterprise developers to Microsoft 365 and Azure. For instance, an improvement in how the market understands both the value and limitations of Microsoft Graph will be essential to this endeavor.
The cloud wars are by no means over, but Ignite was an impressive showcase of Microsoft’s progress. However, Redmond will need to improve on several of these key areas as it vies for supremacy.
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