- Microsoft's AI cloud platform, Azure AI, is at the center of CEO Satya Nadella's vision for the future of Microsoft.
- The platform has 20,000 customers, and more than 85% of Fortune 100 companies have used Azure AI in the past 12 months, according to the company.
- Azure AI takes technologies Microsoft already uses internally and sells them to customers.
- The company that figures out how to sell "pedestrian" uses for artificial intelligence will have an advantage in the cloud-computing business, the Gartner analyst Sid Nag said.
- The Redmond, Washington-based company has had to figure out how to transition its traditional businesses to use the cloud and artificial intelligence. That experience, plus its history working with enterprise customers, could give Microsoft an advantage in selling esoteric technologies like AI to nontech businesses.
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Microsoft formed a new group during a companywide reorganization last year charged with finding a way to sell the artificial-intelligence research and technologies already used in the Redmond, Washington-based company's products to customers.
Now the executive running the group says that it's a key differentiator for Microsoft's Azure cloud business against competitors, including the market-leading Amazon Web Services.
"We knew that customers wanted this," Eric Boyd, the corporate vice president of Microsoft's artificial-intelligence platform, Azure AI, told Business Insider. "Really it was this recognition of, 'How do we tap into all of the great learnings that we have both from our research division and from all of our product divisions and make it something?'"
Simplifying artificial intelligence and machine learning for cloud customers could make Microsoft more competitive in the fierce cloud-computing battle with AWS. Microsoft's cloud-computing business, Azure, is widely considered to be the second-place player against AWS, but it has gained significant ground, including scoring a much-contested $10 billion cloud-computing contract with the Pentagon.
Artificial intelligence is one of the technologies Microsoft CEO Satya Nadella recently said would play a key role in the company's future. Azure AI is at the center of it. The platform now has 20,000 customers, and more than 85% of Fortune 100 companies have used Azure AI in the past 12 months, according to the company.
The start of Azure AI
About 18 months ago, Microsoft reorganized, dismantling its traditional Windows organization in favor of a focus on cloud computing. Amid the shift, Microsoft formed new engineering teams: one for the cloud and artificial intelligence, and another for user experiences and devices including Windows. Boyd's group was created at that time.
Boyd joined Microsoft 10 years ago, first working with Bing Ads, the advertising business behind its Bing search engine.
"I love to tell the story, when I started, Bing lost $2.7 billion," he recently told Business Insider at his office overlooking the Seattle suburb of Bellevue. "Now it's profitable. It's massively profitable. We don't talk about those numbers."
Microsoft doesn't disclose revenue for Bing, but in its most recent annual filing said overall search-advertising revenue grew to $7.6 billion in fiscal year 2019, from just over $7 billion the year before.
When his role shifted, the new group, centered around the Azure AI platform, was formed to find new commercial uses for technologies from Microsoft Research, the company's research subsidiary founded in 1991. Boyd's team is charged with finding ways to connect that research with products for customers.
Azure AI now sells the technologies that power Microsoft products, including the Xbox games console, the Hololens augmented-reality goggles, Bing, and the Office 365 productivity suite.
Understanding customers
Microsoft might have been slower to get into the cloud business than Amazon. When it comes to selling esoteric technologies like artificial intelligence to traditional companies, however, that might actually be an advantage.
Microsoft successfully figured out how to transform traditional businesses to use the cloud and artificial intelligence, such as transforming the nearly 30-year-old desktop-based Office software to cloud-based version Office 365.
"It's something we have gone through ourselves as a company," Boyd said. "The digital transformation that our customers are going through — we've gone through it. We understand the challenges they're going to face."
While AWS started primarily selling to startups (though has grown into serving larger customers), Microsoft has a long history of selling to even the biggest enterprise companies. Microsoft's history selling to enterprises helps it develop and sell the technology those customers need, Boyd said.
"We've worked with enterprises for decades," Boyd said. "We're pretty intimately involved with them and understand the challenges they have."
Microsoft has said Azure AI is being used for things like helping printer companies determine the best time to signal an ink shortage and recently unveiled new tools to make the platform simpler for companies to use.
There are millions of "mundane-sounding" applications of AI, Boyd said, and Microsoft wants to help companies find them — putting aside the application of AI towards exciting new fields like driverless cars, drone deliveries, and drug discovery, there are relatively simple things it can do today that can actually help customers with real problems.
"Every business and every application has the potential to be better by using AI," Boyd said. "That's really our job to take it from this place where it is now where it's difficult to get all these things to happen and make it so simple that it shows up in every part of the business and every part of the industry."
Divergent history
Gartner Research Vice President Sid Nag says that Microsoft might be on to something. The company that figures out how to sell "pedestrian" uses for artificial intelligence will have an advantage in the cloud computing business, he said.
"AI has always been positioned as esoteric technology," Nag said. "The trouble with AI is everybody talks about it as it if it's going to solve world hunger. The challenge is to leverage AI for real-world use cases."
On that front, Amazon hasn't been sitting still: The company has been investing in its own AI tools and says it offers customers the "broadest and deepest set of tools" for machine learning.
More broadly, AWS has been making moves to counteract one of Microsoft's key advantages — the ability to appeal to enterprises. The company is hiring more marketing and salespeople capable of selling AWS to enterprise customers.
"We are investing a lot more this year in sales force and marketing personnel mainly to handle a wider group of customers, an increasingly wide group of products — we continue to add thousands of products and features a year — and we continue to expand geographically,"Amazon Chief Financial Officer Brian Olsavsky recently said of AWS.
Still, while Amazon may rule the cloud-computing market, there are reasons to believe that Boyd is right on when he says that Microsoft has an edge in knowing what customers want from AI.
"Microsoft history is different than Amazon history," Nag said. "Microsoft has always had a seat at the table in a business."
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