What are the lessons learnt from 50 years of Microsoft journey to become the most valuable company and only the 2nd one to cross $3 trillion MCap?

Background:

Microsoft started in garage in 1975 with the vision to have PCs in every desk and every home and launched Windows. During 1990s, it launched Microsoft office, came into gaming with Xbox in 2001 and then started cloud journey with Azure in 2008 under the leadership of Satya Nadella. By Feb 2014, when Satya became the CEO, the market cap was ~ $350 billion. He made “Cloud Business” as the single growth engine instead of putting resources on Windows division. He also took $7.6 billion write-off of former CEO Steve Ballmer’s purchase of Nokia and exited the ambition in mobile. FAANG were the top growth technology firms and Microsoft was not one of them. Cloud and Mobile have become ubiquitous.

Key lessons learnt across the journey for last 10 years since 2014:

1.?????? Focus on big bets with strategic evolution based on market conditions – Microsoft started Cloud business since 2008 with singular focus on it since 2014. Additionally, it strategically pivoted to AI & ML in 2022 with an ecosystem approach leveraging the technology advancements to provide them a leapfrog advantage and made them a de facto leader in AI space against the FAANG competitors.

2.?????? Fully committed leadership – Satya’s eureka moment of AI came from GitHub copilot productivity improvement in software engineering in 2022. Since then, he has gone all out in advancing the impact of AI as general-purpose technology responsibly to fundamentally accelerate everything with co-pilot for every industry – Science; Retail, Pharma, Health, Manufacturing, Banking, Cybersecurity; establishing unique symbiotic investments with products firms and forging long term co-create opportunities with industry sectors and extending it to Quantum, Mixed reality – Embodied AI, Humanoid robots. ?In the creator economy, AI enables Intelligence & Expertise at our fingertips.

3. Strategic symbiotic investments & Partnerships – Unique multi-billion investment in an untested nonprofit startup ahead of competition – Gen AI pioneer Open AI in Jan,2023. Microsoft has agreed to invest $13 billion in OpenAI over 5 years in exchange of a 49% stake. The partnership provides Microsoft early access to OpenAI’s latest models, which are trained and hosted on the company’s cloud computing service, Azure and incorporate this technology into top Microsoft products.

4. Strategic Co-create Partnerships – 5 to 10 years of long-term partnership with different sectors from Product (Open AI) to various sectors (Vodafone; Automotive – Siemens; Health – Mayo Clinic; Data – LSEG, Moody’s etc.)

5. Consistent co-create Innovation with ecosystem roadmap – Microsoft holds relationships with 67% of Fortune 500 firms. It is leveraging the power of Open AI GPT-4 with Azure OpenAI across all the Microsoft software like Word, Outlook, and Teams to create co-pilot assistant for everyone. ?For example, In AI to science, Microsoft recently developed Metagen to generate new molecules to create new battery with 70% less lithium towards energy transition. In Retail space, it developed Retail copilot template for personalized shopping to democratize the concierge-like experience across the shopping journey and reduce time to value. For example, a first-time camper shopping for a camping trip to Yosemite National Park in early March can visit a sporting goods retailer’s website and state in the chat “I’m going camping in Yosemite this March, and I have never camped before. Help me find the right gear.” Shoppers receive a response in natural language with recommendations for essentials. The copilot template for personalized shopping can also surface complementary items to increase basket size and customer satisfaction. In education sector, it enabled personal tutor for everyone in UAE. Microsoft developed?Fabric, next innovation after Sql Server database and data mesh, which combines the best of?Microsoft Power BI, Azure Synapse Analytics and Azure Data Factory to create a single, unified software as a service (SaaS) platform with seven core workloads—each purpose-built for specific personas and specific tasks. The building block approach augments several co-pilots across industry. Microsoft and Moody’s are co-creating new products and services as Moody’s Research Assistant for research and multifaceted risk assessment leveraging Moody’s proprietary data to empower financial services, capital markets, and more.

Microsoft crossed $1 trillion market cap mark in 2019, $2 trillion in 2021 and $3 trillion in 2024. Now, Microsoft is a member of the “Magnificent 7,” including Apple, Nvidia, Amazon, Alphabet, Meta, and Tesla. Microsoft’s stock has grown 1006% since he took over in 2014. With regulators pushing every institution to have champion challenger strategy across hyperscalers, Microsoft has an opportunity. Microsoft can continue to thrive ahead with building block and ecosystem approach to develop digital concierge humanoid for each role.