Microsoft Corporation (NASDAQ:MSFT) Q1 2021 Earnings Conference Call - Final Transcript
Oct 27, 2020 • 05:30 pm ET
Absolutely. [Operator Instructions] Our first question comes from Keith Weiss with Morgan Stanley. Please proceed with your question.
Excellent. Thank you for taking the question. And very nice quarter. I wanted to talk a little bit about Intelligent Cloud and the trends that you're seeing there. We're picking up in stuff, like our CIO surveys, a really strong indication from CIOs that they want to move more aggressively to the public cloud. We're seeing that in good results from Azure. How should we think about the on-premise server and tools business on a going-forward basis?Is this increased preference for public cloud going to more permanently in payer, server and cloud -- I'm sorry, server and tools growth in the on-premise environment, or is there a potential for this to be coming back to the low to mid-single-digit growth that we've seen historically, once we pass these tough comps?
Let me start and -- Keith, thanks for the question, and Amy, you can add to it. A couple of things, Keith. One is, the approach we have always taken is that distributed computing will remain distributed. So, the cloud and the edge is what will be the distributor fabric for applications. So, if you look at where our growth is coming from for the all up number in Intelligent Cloud, it's coming from the infrastructure layer, the flexibility that we have around hybrid deployment, things like Azure Arc, a very differentiated. Same thing with data, that's one of the big future innovations, even in the last quarter was the ability to deploy, for example, Azure data in any cloud, including the edge. So that deployment drives application preference for our infrastructure.
The two other things that are happening is developers, whether it's lift shift, modernized motion or just new applications because of what they're doing on GitHub or Azure DevOps or VS Code, choosing Azure services, and with Power Platform, Dynamics or M 365 because a lot of these logic apps that people build are about stitching together extensions of workflows of multiple SaaS apps. So, we have all three of these trends leading to more intense usage of infrastructure data and the application PaaS services. And so, that's how we view it. I don't sort of look at each quarter what's happening on server plus cloud. I look at the holistic deployment options that our customers need for their increasingly distributed applications. And so, that's sort of what I see. And Amy, if you want to add to it, please go ahead.
Sure. And Keith, maybe I can help a little bit. In general, I think, it's easier if you think about Azure plus the annuity business as being this durable hybrid edge cloud value that Satya is talking about. And we continue to see very strong and consistent performance across those things, in terms of renewal rates, the strength of premium, the strength of hybrid value props. And so, that aspect, Keith, because of the reasons Satya mentioned, we don't