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Satya Nadella Says Microsoft Will Get $20 Billion Per Year From Business Cloud by 2018

Though perhaps a bumpy transition, Nadella insists that Microsoft has an opportunity to actually gain business with the shifts.

Asa Mathat

Microsoft CEO Satya Nadella sought to reassure Wall Street on Wednesday that the shifts to a “mobile-first, cloud-first” world will actually be a good thing for Microsoft, despite the challenges.

As recently as a couple of years ago, Microsoft mainly sold software that consumers and businesses purchased every few years. These days, though, Microsoft sells subscriptions, makes revenue from search and even builds some of its own hardware.

“This is not a one-for-one shift,” Nadella said at a meeting with financial analysts. “There is actually a pretty significant expansion of the value we can deliver.”

Nadella set a goal that by sometime in fiscal 2018, Microsoft’s corporate cloud business will be on a $20 billion annual run rate, up from $6.3 billion today. Microsoft’s fiscal 2018 starts July 1, 2017 and runs through June 30, 2018.

For now, though, Microsoft faces a sluggish PC market and significant challenges in the mobile space, where Windows badly trails mobile operating systems from Apple and Google.

Earlier in the day, Microsoft announced a number of new Windows 10-related efforts, including an easier means for iOS and Android developers to bring their code to Windows, the addition of carrier billing for Windows app purchases and new demos of its HoloLens augmented reality glasses.

The company also set a bold goal of having Windows 10 running on a billion devices within two to three years of the operating system’s release this summer.

Nadella clarified that Microsoft’s goal is to have that number by its fiscal year 2018.

“We believe that is what will help us deliver more value,” Nadella said. “It will help developers come to our platform. It makes the entire ecosystem of Windows devices much healthier.”

On the Office front, Nadella said Microsoft is working on new applications, such as Sway and Delve as well as the role the Cortana automated assistant can play.

“This is not just about Word, Excel, PowerPoint,” he said.

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