Nadella: Despite Cloud push, on-premises products still matter to Microsoft

Microsoft's CEO isn't giving up on the company's on-premises tools even as the company continues to promote Azure

Microsoft CEO Satya Nadella

Microsoft CEO Satya Nadella

Microsoft is pushing hard to get businesses to use its Azure Cloud platform, but CEO Satya Nadella says that the company hasn't given up on its products tailored for companies that still have on-premises data centers.

"Overall, I start even with the worldview that my server business is not some legacy business," he said during a conference call with financial analysts. "We fundamentally think of our servers as the extension of the Cloud; I even describe it architecturally as the edge of our Cloud," he said.

Nadella was responding to a question about Microsoft's server revenue for its fiscal fourth quarter, which rose 4 percent year over year. Microsoft's server products actually gained market share from competitors in the quarter, according to Nadella. What's more, he said that the company's success comes from a wide variety of products targeted at businesses with on-premises workloads, including Sharepoint, Exchange Server and Lync Server.

The Microsoft CEO's viewpoint is markedly different from that of Amazon Web Services chief, Andy Jassy, who has argued that the public Cloud is the only road forward for businesses. Of course, Microsoft has an incentive to continue supporting businesses with on-premises deployments since it already has customers using its existing products with their current deployment before moving anything to the public cloud.

Nadella also said that Azure provides the company with new opportunities to reach into markets that it wouldn't have been a part of earlier in its life. He cited the new Cortana Analytics service on Azure as a prime example: even though Microsoft has been a strong player in the database market, it wasn't previously part of the conversation around advanced analytics workloads.

"So I'm excited about those new workloads -- that are in many cases born-in-the-cloud workloads -- where we are expanding our market opportunity and continuing to out-perform our peers and grab share when it comes to (the on-premises market)," he said.

Nadella's comments came after Microsoft announced its first quarterly loss in three years, caused primarily by a $US7.5 billion write-down the company took related to its acquisition of Nokia's devices and services business.

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