Satya: compute is going where the data gets generated

(Transcript from Seeking Alpha) One analyst, Karl E. Keirstead of Deutsche Bank Securities, Inc, asked an interesting question and I found the answer from Satya enlightening.

Most of your peers obviously, when they're pivoting to the cloud, are seeing weakness on the on-prem side. But what's unique about Microsoft is not only is Azure growth accelerating, but your server product growth at 7% is up meaningfully year over year as well, so we're not seeing that trade-off with Microsoft. When do you think customers will actually start migrating existing on-prem Microsoft workloads into Azure such that that server product line might start to decelerate?.

Satya Nadella - Microsoft Corp.

The timeframes of these migrations and so on are a lot more complicated than they perhaps appear on the surface. So here's what we think of. For example, right when everyone's talking about the cloud, the most interesting part is the edge of the cloud. Whether it's IoT, whether it's the auto industry, whether it's what's happening in retail, essentially compute is going where the data gets generated, and increasingly data is getting generated at the volumes in which it's drawing compute to it, which is the edge.

So if you look even at our announcements over this quarter, a lot of what we have done with IoT is create an IoT edge. Of course, we have an amazing cloud with the SaaS services for IoT, but the edge compute, the ability to run a neural network at the edge, do inferences at the edge is exciting. Azure Stack is going to completely change what hybrid is and the expectations customers have with hybrid.

What's happening with SQL Server, SQL Server is no longer just about a database that's on-premise. It's a database that's on-premise that can be tiered with the cloud. A single table can be extended to the cloud. The queries will work across both the tiering. And so to me, the innovative work we're doing is what I would characterize as the future of true distributed computing, which is it will remain distributed. And that's what we are building towards. We'll talk a lot more and build on that about that architecture and what we're seeing with customers.

Then given that what you are saying is true, which is there will be some which will be lift and shift of workloads, but then there is lift, shift, and modernizing of workloads. And in that modernizing phase, it's not just being modernized to live only in what is called a cloud, but it will also be modernized to live in the edge of the cloud. And so that's the transformation at play. That's a multiyear and a generational transformation. Quarter to quarter, there will be all kinds of volatility. But what is clear to me and clear to Microsoft's engineers is that we have a very clear world view of what is it that we want to get done, and we stay focused on it.