Over the course of the past few months I’ve been watching… ok, scrutinizing Microsoft Corporation (NASDAQ:MSFT). Most anyone reading this will already know the organization has been transforming itself, focusing loss on legacy businesses like its Windows operating system and Microsoft Office productivity software and, instead, developing cloud computing products and artificial intelligence tools.
Well, as of this week, it’s tough to say anything other than that transformation is complete.
More importantly, it’s tough to say the caterpillar hasn’t become a butterfly. If you have been mulling a position in MSFT stock but just weren’t sure the company would ever reclaim the relevancy it had in the 90s and early 2000s, rest assured it has.
The New and Improved Microsoft
The ‘coming of age’ for the new and improved Microsoft happened this week at its annual Ignite conference, which, in simple terms, serves as a showcase for every cool thing Microsoft is about to — or already has — brought to the market.
Truth be told, none of the revelations were a complete shock to anyone following the Microsoft story, even at arm’s length; many were just extensions of previous developments.
Nevertheless, it’s clear that CEO Satya Nadella knows the enterprise market expects to be blown away — and he’s delivering.
Case in point: The newest feature of Microsoft’s Azure cloud-computing management platform allows for a seamless, and lower cost, migration to its cloud servers than it would cost an organization to move its SQL databases over to Amazon Web Services (AWS) — a clear shot at Amazon.com, Inc. (NASDAQ:AMZN), which is the current market share leader of the cloud computing space.
And to clarify, it was another clear shot at Amazon’s cloud computing platform. As yours truly here noted in July, Nadella has been taking aim at AWS for some time now. The big news then was a change in how Azure customers pay for access to the platform. The new scheme is, even if clients own and use their own hybrid servers outright, billing on a per-usage basis — the same way customers renting server time/space from Microsoft are billed. The end result is an always-updated, lower-cost solution that essentially makes Microsoft business partners with those organizations.
It’s not just where Microsoft has taken its cloud platform in terms of customer-friendliness, though. It’s also taken its artificial intelligence capabilities to the next level of functionality.
In early September I took a deep look at a handful of artificial intelligence acquisitions Microsoft had made, setting the stage for the launch of a deep-learning system called Project Brainwave. It was just a microcosm of what Microsoft’s been working on in terms of AI though. At the Ignite conference, the company announced it would be leveraging its artificial intelligence tools to better understand and respond to language, evolving its platform to one that understands sentiment and key phrases.
The company isn’t stopping there on the artificial intelligence front, though. It’s also moving waist-deep into quantum computing.
For those unfamiliar with the term, quantum computing is a whole new kind of computing capacity. Rather than a silicon and metal chip processing the flow of countless electrons to simultaneously handle millions of commands and solve math problems that are ultimately a series of ones and zeroes, quantum computing allows for the co-existence of 1s and 0s in the same space at the same time. This approach can solve a computational riddle that would take months on a silicon-based computer into a puzzle that may only take minutes. And, yes, Nadella is already envisioning practical uses of this technology.
It’s a proactive effort rarely seen from the company, even in the midst of its glory days.
Microsoft will also (finally) be integrating its LinkedIn property with its cloud-based Office 365 suite in a very intuitive way, bolstering the value of both, as well as the value of Microsoft stock.
Bottom Line for MSFT Stock
As was noted, none of the pet projects unveiled at this year’s Ignite conference were surprising. Rather, they were just the natural progression of developments that were already underway. They’re big progressions, though, and Nadella has steered the company through many of them since he took the helm in 2014. It’s become pretty undeniable since then — Microsoft isn’t what it used to be, in a good way.
If you were worried MSFT was going to remain a stock that simply couldn’t keep up with the likes of AMZN or shares of Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) — both of which compete with Microsoft on more than one front — you can let go of your concern.
Nadella knows exactly where his company is… and where it needs to go.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter.
