Microsoft Corporation Presents at The Goldman Sachs Technology & Internet Conference, Feb-11-2015 09:40 AM - NasdaqGS:MSFT

NasdaqGS:MSFT

David M. O'Hara, the Former Executive Vice President and Chief Financial Officer of Microsoft's Commercial Division, discussed various topics during his presentation at The Goldman Sachs Technology & Internet Conference in 2015. Here is a detailed summary of his comments:

General Overview

• Title and Responsibilities: O'Hara oversees the Application and Services Group (Office, Skype, MSN, Bing), the Cloud and Enterprise (C&E) group, and the Dynamics (MBS) group.

Leadership Under Satya Nadella

• Employee Morale: Employees feel a strong connection with Satya Nadella and are more energized and proud to work at Microsoft.
• Customer Focus: Satya emphasizes helping customers succeed and providing them with choices, including cross-platform support and compatibility with other development environments.
• Mindset Shift: Satya challenges the organization to evolve constantly and avoid complacency, fostering a culture of urgency and innovation.

Office 365

• Consumer Adoption: Consumers appreciate the continuous innovation and online access offered by Office 365, leading to strong attach rates and 9.2 million Home and Personal subscribers.
• Enterprise Adoption: 45% of enterprise agreements renewed include Office 365, indicating a significant shift towards cloud solutions. Enterprises often adopt Office 365 gradually, rolling it out to specific divisions before expanding.
• Lifetime Value: Microsoft sees opportunities to upsell to higher-end SKUs and attach additional products like the Enterprise Mobility Suite, increasing lifetime customer value.

Azure

• Competitive Positioning: Azure competes in a highly competitive market, with Microsoft investing heavily to catch up with rivals. Customer satisfaction and market penetration are growing.
• Strategic Approach: Microsoft focuses on hyperscale capabilities, hybrid environments supporting multiple development tools, and enterprise-level security and stability.
• Advantages Over Competitors: Existing customer relationships, a strong asset base, and a comprehensive suite of applications (like databases and mail) give Microsoft an edge in the cloud market.

Bing

• Profitability: Bing is expected to become profitable in fiscal year 2016 through a combination of revenue growth and cost management.
• Market Share: Bing's U.S. market share increased to 19.7%, with revenue per search rising consistently.
• Mobile Strategy: Bing integrates with Microsoft devices and forms partnerships with other platforms (e.g., Amazon Kindle, Apple's Siri).
• Apple Search Agreement: Microsoft remains cautious about entering into search deals that do not make economic sense, considering the impact on revenue per search and overall business economics.

Ad Tech

• Positioning: Microsoft is well-positioned as a major publisher and seeks to improve monetization of its ad tech business within the broader Microsoft strategy.

Dual Users

• Investment Strategy: Microsoft aims to be relevant to users who use technology for both work and personal purposes, acquiring companies like Acompli (now the Outlook app for mobile) to enhance this capability.

Mojang

• Acquisition Purpose: The Mojang acquisition (creators of Minecraft) aims to deepen engagement with Windows, particularly among gamers, potentially improving margins through verticalization.

Skype

• Competitive Landscape: Skype faces stiff competition from apps like Messenger, WhatsApp, and LINE. Microsoft leverages Skype insights to improve Skype for Business (formerly Lync) and invests in innovations like Skype Translator.

Bing Differentiation

• Core Algorithm: Bing invests heavily in its search platform to ensure accurate and relevant results.
• User Experience: Bing differentiates itself through user experience elements, such as the visual presentation of search results.

Conclusion

O'Hara concluded his presentation by thanking the audience and emphasizing Microsoft's commitment to innovation and customer success under Satya Nadella's leadership.