Microsoft Corporation (MSFT) Earnings Call Transcript & Summary

Hello, and welcome to the Fourth Annual Wells Fargo TMT Summit. My name is Phil Winslow. I'm the software analyst here at Wells Fargo. I'm very excited to have one of my favorite company -- companies joining us, Microsoft, I've been a long time a Tom fan. And obviously, I've been a big fan of Azure. I was just looking at some notes. I think it was my tenth anniversary of being an Azure [ bourn ]. So very excited to welcome Julia White, Corporate Vice President of Azure Marketing. Julia, thanks for joining us.

I'm so glad to be here. Thanks for having me.

Cool. Well, just to kick things off, I wonder if you could just level set -- thanks for everyone on the webcast. Can you tell us a little bit about your background, roles or responsibilities at Microsoft?

Absolutely. So I've been at Microsoft, almost 20 years now, a long time. And the past 6 years, I've been leading the Azure and server product marketing. So kind of all things are Azure cloud services as well as things like Windows Servers, SQL Server, Visual Studio developer, tool chain as well.

So all the fun stuff, all the stuff I love. it's the -- is that we're going to have a great conversation. So I guess 2020, where do you guys been so far? If I think back in April on your fiscal Q3 earnings call, Satya noted that you've seen 2 years of digital transformation in the first 2 months of the pandemic. We're now 10 months now into the pandemic. And we believe CIOs sort of reevaluating their strategies, whereby no cloud has essentially become a no-go going forward, at least that's a one-liner that we've been using. So my 2 questions, can you talk about the COVID-19 impact on Azure? How it's evolved over the past 10 months? And what are your customers and partners telling you?

Yes. I know it has been a wild ride, to say the least. I mean -- and I mean, first, stepping back and seeing and working with customers who had already moved to the cloud, had already done a lot of work around digital capabilities. It is super clear that they've been able to be more agile, adjust, adapt to what's happened. So it has been this idea of digital transformation and how important digital capabilities are. I think what I've learned most is that it really does matter. This is a bit of a test -- pressure test, frankly, of whether that's proven to be true. And it's -- and definitely seen it in terms of agility, ability to switch and meet customers' demands changing, definitely different. In terms of the overall trends we're seeing, one, a lot more urgency to the cloud. I mean everyone had a cloud plan. As you know, like it wasn't a no cloud, but it's now the urgency and then much bigger, right? They were dabbling or having a very long plan. Now they're like bigger and faster. So that's certainly true. And a lot of it, why the agility to be able to scale up and down. A lot of customers are like I wish I could scale down quickly in moments, so recognizing that. And a lot of cost management, be able to cost optimize, not run servers at low capacity over the long run. So lots of that type of opportunity. But then also just need a lot more better capabilities, things like real-time analytics, rapid app development, they just needed need the cloud. Needed the cloud for those. So lots of those shifts, and we can talk more about the specifics there. But I think the other thing is the people always ask me like why isn't cloud adoption happen faster or sooner? I'm like it's just culture. Like people, norms. And that to me is maybe the most dramatic thing that's changed with COVID, right, around the IT norms or the culture or whatever reasons they didn't want to move faster, it kind blown away. And so that's -- I think that's going to be one of the most durable shifts we've seen continuing to increase and be durable through this time. And of course, when I say that people like, great, is Azure's revenue going to spike then? I'd have to remind us all that cloud consumption does take time. Each of these projects as they start, whether it's a migration, a new app dev, they start small, but they grow out over time. But to me, it's a incredible strength of long-term growth when we see the increase of those projects and the size of those projects increasing as they go. So -- and then I think the last bit is, as we looked at the different industries and how they're impacted, the high-impacted industry, certainly, a cloud adoption fell, right? They cost optimize down. They did other things. But the impact -- the industries that were not as impacted absolutely spiked. So it kind of bounced off. And we're now actually seeing even the high-impacted industries come back to more normal weights. And so we're starting to see that level off.

Yes, exactly. I mean when you were just talking -- a quote from Mike Tyson that went through my mind, "Everybody has a plan until they get punched in the face." Yes, that's sort of what I feel like about cloud migration and digital transformation. There was a plan, but oh my gosh, whatever my plan was, I need to accelerate it. And I guess that leads me to my next question about sort of prioritization of digital transformation. Can you talk about what you're seeing from a project creation, product prioritization perspective from your customers? How it's evolved? How do you expect this to evolve in the future? And over the past 10 months, what has surprised you the most about Azure?

Okay.

Sorry, a lot in there.

Yes. All right. I'll pull that apart. So I'd say the couple of things that changed dramatically right away in terms of prioritization. So virtual desktop, right? Our services around Windows Virtual Desktop absolutely spiked. And everyone went home and needed to be working remotely, along with Teams, obviously Microsoft Teams is option. And our Virtual Desktop and our Teams integration works together. So we saw that both grow. And those were projects underway, but they became quickly the #1 project. Similarly, security. And like always, hackers never waste a good crises. And so around COVID, we saw a lot of new different kinds of attacks, different kinds of techniques being used. And so we saw a bunch of Azure security, kind of a broader enterprise mobility security capabilities being put into place quickly, particularly with remote work. Not everyone had done all the network security, all the end point security they needed to have that in place. So that certainly became a top priority from a project perspective. And then the third one, that was in the mix, that suddenly became more urgent was around rapid business process changes, right? You have line of business systems, you have ways you're doing work, you suddenly need to evolve those really quickly. And Microsoft has this technology called Microsoft Power Apps, a low-code way to build applications. And that became the favorite tool of choice to whether it was hospitals trying to track PPE really quickly or retailers moving to curbside pickup and remote checkout. That type of experience in Starbucks doing mobile pickup on their app, being able to do that in the low-code way really quickly. So you had maybe the nurses in the hospital figuring out the process versus needing professional developers. So with that, we did a big push around integrating Azure and our capabilities, whether it be data services or dev services with GitHub and Power Apps. So now we have a beautiful kind of professional developer to low-code experience based on the urgency there. So that was certainly a big one. And then I think your question of what hasn't changed, but maybe is continuing at a strong pace is analytics. And again, those -- the modernization of analytics was very much underway and is underway. A lot of people are still sitting on old legacy systems that aren't keeping up. And COVID just put pressure on that, right? People like used to be fine and I got 60-day and 90-day old data, like no way. I need like 12-hour data. And all my past forecasting models need to evolve. And so that use of analytics and getting to modern analytics has continued to be quite strong. And I expect that one actually to be even continue to accelerate as we move forward to certainly hot area there. And then the steady run rate business of migrations of existing systems, hybrid use cases, I think those are steady states. Certainly, we saw a lot of people quickly move to backup disaster recovery in the cloud, but the kind of run rate of migrations and cost optimization, super strong.

Yes. I have to describe those 2 as "gateway drugs to the cloud." Again, disaster recovery, business continuity, where, hey, from a risk mitigation perspective to potentially use this capacity. Oh, it was maybe cheaper than I'd been done -- than been doing before. It was better. So maybe I'll then talk about production workloads.

Yes, that's the culture norm. That's a very culturally easy way to kind of start the journey, right, and very confident. Yes.

Yes. Exactly. I'm sure Microsoft from a market perspective has a used gateway drug. But as an analyst, I can't call it that. But the -- switching gears just a little bit here, but while we're still obviously focus on Azure. I think investors are always very much solely focused on sort of the headline Azure growth number. But I always say there's so much more to love here. But from your perspective, what are some of the most exciting emerging or critical but underappreciated parts of the Azure portfolio?

Yes, it's such a vast portfolio. So I love this question. So before I jump into that, I would say, though, it is -- first, while everyone loves the Azure numbers. Important to appreciate, right, that our overall commercial cloud business is over $15 billion this last quarter and grew over 30%. And so the thing I want to start with is Azure is a core part of our overall Microsoft Cloud, right? And that's across like Microsoft 365, Dynamics 365, Power Platform, GitHub, and then, of course, the underpinning of that being Azure. And I think you're seeing us, and I mentioned the integration of GitHub and Power Apps and Azure are coming together to create these experiences. You're seeing more -- us do more and more of that to provide those integrated solutions for our customers. So I think that's certainly something that's exciting and emerging and maybe still underappreciated. So all 3 of those things, but really keeping an eye towards the Microsoft cloud growth all up and the Microsoft cloud experience all out. So that would be the first thing I might speak to you. And within Azure more specifically, so you had exciting, emerging and underappreciated it all. I'll break those down. I'd say, let's start with the critical, but underappreciated. Azure SQL, it's a big business. It's a place where customers really look to us. And the thing that's so strong there is we've taken our 30-year old database engine that we perfected and secured, and it's the same on-prem. It's the same in Azure. It's even the same with Edge. And so you have this amazing capability and efficiencies. So you have the same skills, same systems being used anywhere as you build these distributed applications and distributed systems. So that's certainly a key opportunity around Azure. And then as I mentioned, the Windows Virtual Desktop, VDI, again, not sexy, but a huge percentage of people's existing data center footprint is on VDI. And these opportunities to modernize them, move to a more capable platform, run it more cost effectively, certainly a big piece of it. So kind of some underappreciated areas maybe. I think from the exciting category, analytics, right? This is -- it's a long time coming at some level, like of all the places that haven't modernized. But there's this moment of moving to a true cloud-native analytics system and seeing that we have things like Azure Synapse and Azure Power BI that kind of bring that together the opportunity. And the actual business, in fact, how much like Microsoft CFO cares about this, how much our business leaders care about this because what it unlocks from an organizational decision-making, actually making it much better informed decisions, database cultures, all of that is there. Another area I'm building on that would be AI, right? I mean so much opportunity in this. And we're seeing -- it's been, again, a long journey on AI and what we're doing, but we're really seeing some phenomenal breakthroughs. And I was just looking at the latest on our image recognition technology, where it kind of -- I used to be able to say, oh, "Look, it's 2 people talking on the webcast." Now we literally say, this age, this gender, this person. It's just amazing. And you're thinking about so many different used cases, whether it's for working with people who are visually impaired or just navigating the world. So really starting to see that. And with that, the responsible AI aspect of it, right, the transparency in the models, data protection around the models, reducing bias, that category of things, I think, is very exciting on that one. And then from the emerging category, the things to keep your eye on the future, I would say, mixed reality. That's a place where we've been long in mixed reality. And just like we've seen AI evolve from being this kind of sexy thing to being something that's just part of every single application, we expect mixed reality to have the same thing, right? There's going to be an element of mixed reality. There's a need for mixed realty in almost any application you have. And as that gets easier, and cloud services make that more native, then the devices like Tall Lens and others expand, it will become more accessible to everybody. So that's -- and I think it's, again, been underway for a long time, we even start to see how that's going to really take off. And then more on the industrial side of things, that, that is digital twins. And the idea of -- in the kind of the next-generation shift from IoT, right, where you have connected things, and this is essentially taking it to connected environments. So now you have whole systems and understanding how the system of connected things works together? How do you optimize it? How do you run it with greater insight? How do you understand the overall environment that's connected on that part? And then last but not the least, certainly further out, but massively profound is quantum, right? And we're now, what, 14 years into our quantum computing investment, amazingly enough. And it will be working more years, too. But building up the software language, the development, the SDKs, the simulation engine, and getting all that ready for the quantum compute capability as well.

Yes. And in fact, I just saw Saul Van Beurden, our Head of Technology, kicked off today. That's one of the things he's been talking about, frankly, since he got here. And every time I interview him, he is sort of increasingly excited about, hey, quantum is not here yet, but it's getting closer and the sort of the pillars of foundational layers are being put in place. We actually see a white paper as a bank about some of the things that quantum could mean. So yes, they're definitely excited about that. Okay. Maybe not -- I won't put that in Azure numbers yet, but I'm excited about it nonetheless.

It was interesting. Even on that one, we have a quantum simulation engine. So it's running quantum algorithms, just on classical compute, CPU, GPU. And we're actually seeing, like remarkable breakthroughs, working with hospitals on MRI recognition, like massive improvements, even though it's just simulating it. It's interesting. So yes, a lot of potential there, but not yet in the numbers.

Yes, exactly. Yes. Fascinating, call it, put that in the category, stay tuned. And the -- now obviously, we just walk through a broad portfolio there. And I guess a follow-up question there is, thinking about where to invest. What is Microsoft sort framework for growth and operating investments in the medium and long term, especially sort of in the context of Azure's revenue? Where do you think we should see increasing investments? What areas can we maybe see some deep [ harvesting like ]?

Okay. I mean again stepping back for a second, when you look at the overall Azure total addressable market is about $4.5 trillion, so like massive. It's just scratching the surface. So I always remind ourselves that there's still a ton of growth in the core business, right, around compute for systems, like hybrid cloud solutions, running big SAP, ERP systems in the cloud, high-performance computing network, network security. So lots of growth and potential and investment, frankly, in the core part of the business, which is still a healthy, healthy part of it. From an increase perspective, as I referenced before, analytics, a lot of investment there, machine learning. Those 2 are both evolving, really maturing in broad terms TAMs themselves. And so I expect those to be big workhorses, overall, as we move forward. And then a few other new areas, like where we've moved into our operators in helping telecom communications and operators. We've acquired Metaswitch and Affirmed Networks in that space as well. So big investments there and really helping that segment run and optimize into a digital world, right, just like all the other industries moving to digital transformation now in the operator space. And then working with them, right, whether it's 4G, 5G and beyond, helping them modernize all of that. And then also from a kind of increased investment area, just overall cloud-native app development as a lot of -- lot of organizations have been tweaking and modernizing and migrating applications. But now it really -- like more and more like, we need to just move to a full cloud native application, capabilities like containers, Kubernetes, adding AI services into these applications in really meaningful ways. I'm like, if your application isn't leveraging AI in the next 5 years, it's going to be irrelevant. So going deeper into the code, not just shifting it over and optimizing it. So that's certainly on the radar from an investment perspective. And then it was actually from an IoT and Edge perspective, actually, 4 years ago, we announced our kind of $5 billion investment that was going to be spanned in 5 years. So we're coming up on the tail -- the last few years of that. But -- and that's a place where we've been long on as well. I think Satya, 3 years ago, pointed like intelligent cloud, intelligent edge in that app pattern. So investment, I think, well ahead of market, but continuing to be on that very important secular change on that. And then there's not a lot to deprioritize in Azure. Anyway, but it's a good problem. It's a high-class problem. There's so many -- it's more about which growth opportunities are you going to wait on versus which ones are you going to go big on versus deprioritizing per se.

Got it. Yes. And obviously, I just mentioned the Edge, I mean, we actually wrote about that when my team and I came over to Wells Fargo, January, 3.5 years ago. And I was like, hey, I think there's this next platform shift coming. I don't know what it's called exactly. We were calling it fog or microfog.

I remember that.

And then all of a sudden, I was like, I'm not sure what this is, but it's -- I think it's going to be big. And then I was sitting in build and all of a sudden, there was intelligent cloud and intelligent edge. I'm like, yes, it's like -- first off, it was better branding than microfog. But I was like maybe we're not crazy. Satya is even up on stage, [ Bill talking about it ]. So I'm excited with that. And actually, to your point on the network side, I thought there was also going to be sort of a natural extension of Edge is that the role of 5G and the operator is in a Edge, call it, to cloud world, where they're kind of the glue.

Absolutely. Yes, all those pieces have to come together. And they are, right, and not all here yet, but you start to see that app pattern. And as we know, the cloud and Edge is really in our simple terms an application pattern. And the networking capability is what makes that feasible and interesting in a more compelling way.

Yes. I mean I'd actually argue sometimes that networking is actually the driver sometimes of the platform shifts and computing. If you think about it, client server was actually enabled probably by Ethernet. So connectivity load is often the driver of the platform shifts...

Or the bottleneck, one or the other. But yes.

Yes. Exactly. So -- but they work together. And so I didn't want to double-click on just something you mentioned earlier, a hybrid cloud, multi-cloud because that's obviously -- honestly, that was my original ball case 10 years ago on Microsoft was just that amazing relationship you have customers on-premise, but also then extending that into the cloud with Azure, the affordability of, call it, code, tools, processes, people to the cloud. But as customers increasingly embrace the cloud, how should we think about the growth of your on-premise offerings and now hybrid and multi-cloud that comes into play?

Yes. And as you stated, we've always held that on-premise this cloud edge will be durable, right, and that there will be technology on-premises, and that's incredibly important, whether that's big servers or whether that's small devices, right? And -- but we continue to invest in our servers, create modern experiences. Like an example, Azure Stack HCI, which is a window server-based capability that -- it's perfect for modernizing on-prem systems and bringing down your on-prem footprint, but like with cloud capabilities for disaster recovery and back up, those types of things. So bridging those 2 worlds. And actually, I mean a great stat is that over 1/3 of our Windows Server and SQL Server enterprise customers are using our hybrid benefits to deploy to Azure, right? And that's a fantastic benefit. It gives more value for your software assurance agreement on with your on-premises service, but also it gives you benefit into the cloud, right? And that's the one where, with that capability, AWS is actually 5x more expensive than Azure for running Windows Server and SQL Server. So it's a huge customer benefit as well. So it's the technology part of it, but it's also the business model part that supports it as well to ensure that customer value holistically.

Yes. One of the words, I think has been probably the biggest change, and maybe the most impactful change over the past, call it, 24 months ago, it's been the word multi. So it's not just simply hybrid cloud, but multi-cloud feature. A couple of questions here. What are you seeing in the field as the top reasons why customer strategies are shifting to multi-cloud? And what do you think the implications for Azure are? And particularly, how do you sort of defend your mode in the world of multi-cloud?

Yes. Yes, multi-cloud is the new term. I don't think it's a new reality, right? It's just a new term. But it's all right, marking personally like those new terms. And what -- how do customers get there? Why do they get there? It is -- the common things I see are its acquisitions, right? I had 1 cloud strategy, acquired or different cloud strategies come together, super, super common. There is some level of, like, hey, I don't want to be all in 1 vendor. I'm going to distribute my cloud capabilities. And a lot of it, I would say, was very much bottoms up. It wasn't because there was a strategic decision to be multi-cloud. It just kind of happened. My developer chose this, my data science teams likes that. These are tend to be project-by-project decisions. And so you might run your SAP system on 1 cloud and do data science project on another cloud. And again, based on the individual group, they decided to do that. And mostly, when I talk to CIOs or CTOs, it kind of happened. And they discovered themselves there versus it being super intentional. But I look at -- that's exactly what on-premises look like. The data centers are 40 years. There was like, hey, they were never homogeneous. Lots of different systems, lots of different tools. Despite people's best intentions, it is a heterogeneous world, and there'll always be best-of-breed, best-of-suite, those kind of dynamics. I don't think the cloud is going to be a lot different, right? And I think that -- and I think we've had that view and frankly, of hybrid recognizes that view of that everything will just sit in 1 big cloud on that one. So what we've tried to do is take our history of really understanding hybrid, like working across different environments in a seamless fashion, not making people run 2 environments next to each other into what we're doing with multi-cloud. And so like -- I think we have great wisdom to bring to bear on that. And if we -- from an infrastructure perspective, we've been doing Azure Stack for a long time, where you can literally bring Azure infrastructure anywhere. Now what's moved is we now can do that as a software layer, maybe this technology called, Azure Arc. And essentially, it enables the software capabilities of the cloud to be run anywhere as well. So it's just matching the infra and the software. So the data services, the developer services can also be moved around. Today, the most exciting thing customers are like, great, I can run at -- in my on-prem and my cloud, like that's the most common. But I'm starting to see more of like, oh, I think I can run Azure SQL over in different clouds compute. Okay, well, do that. And then -- and lots of different reasons. Reality of enterprise customers are complicated and have lots of nuances. And so this is just flexibility for them to do that.

Yes. Definitely, I mean, even going back to the Virtual Build 2020, there's a lot of buzz around the Azure Arc. And I just want to spend a moment on that, maybe help investors understand sort of what Azure Arc is? Why is it important? And you touched on it a little bit, but what is it in the [indiscernible] customers would do have kind of moving forward?

Yes. No, I'm glad you asked because it is a bit of a complicated area, right? So people can be like what are you talking about? So what Azure, I'll break it down. It's 2 things, right? The first thing is that Azure Arc literally takes the management, the control plane of what's my policies, what kind of -- how do I manage my virtual machines or my services. And it extends it out of Azure. So what you use to manage all your resources in Azure, we used to extend it out, so you can do that anywhere. So it can be the same way you manage what sits on-premises. It can be the same system managers, what systems run in AWS, as an example. So it just extends Azure management plane. So you're setting policies globally, you're selling resource allocation globally. So that's the first part. But because then -- we have then have this management plane that extends, what it enables us to do a second thing, which is we call Arc enable, all of our Azure software. So all of our managed services can then run with that management plane, which means wherever Azure Arc resides, we can take our Azure services. So Azure SQL database, Azure Postgres database, Azure Kubernetes service, can then also run wherever you want. So again, common is like, hey, I want to run this on an edge device in some other location or I want to run it on-premise or I want to have a distributor that model. I want to put some of my data services that are sitting in a different cloud. That type of flexibility is what it enables. So that's the core of what it is. And just to make it real because it's conceptual like Siemens Healthineers. They're one of the world's largest medical equipment suppliers, right? What they've done is use Azure Arc to deploy updates consistently at scale from Azure to all of their medical equipment that's distributed all over the world, right? And during the pandemic, they needed to quickly update imaging, diagnostic equipment, those type of things. And they could do that remotely. And so it's a way that you can manage from one place, but across all of your systems.

Got it. All right. Well, we got 5 minutes left. And so let's shift to the Edge, as I mentioned earlier, been a big fan of Edge. So I wonder if you could give us just an update, if you can think about intelligent edge, where we are sort of in the life cycle of intelligent edge. And how do you think about the opportunity for Microsoft and for Azure?

Yes. I mean I think as you talk about it, it was an early idea, but that's -- we're now becoming a bit more the new normal. And I was thinking about it, like it's hard to think about an application being built today that doesn't have some combination of cloud and edge technology, right? Maybe people don't talk about it that way or think about it that way, but what a manufacturing plant, right? You have all these connected systems, and it's -- of course, using cloud for data and analytics. Even like a big company to work with has their fuel -- their gas pumps at the fuel station, getting connected, so they can check for safety if someone's smoking while they're pumping up their gas, like those kinds of things, that's the edge compute working with the cloud compute or retail shelves to notify people that are out of stock. Cloud and edge, contactless delivery systems, smart appliances, all those things are just examples of cloud and edge application patterns. Some of the code is sitting on that edge device. A lot of the code is sitting in the cloud and are working in concert with each other. So if you think about it that way, it's very evolved. Again, the networking part of it, as 5G emerges, as we get that, it will become more and more capable to do those really ultra-low latency requirements as well. So that will also be another 2-point unlocking of that next step function. But if I think about the maturity there from the -- there's the edge device maturity, and that's certainly happening, and we're trying to help the industry with things like Azure Sphere, that is world-class security even on MCU devices, ability to run full AI models on very small devices. They're getting high performance, they're getting secure, they're getting cheap. That unlocks that edge part of it. And then from the cloud perspective, right, our investments in IoT services, AI services, things like Azure Arc, make that possible. So I'd say we are now into -- we're not yet mainstream on this thing, but it's pretty much the kind of the new normal as we move forward.

Yes. It kind of feels like it's becoming more real. I mean I'm thinking about the year after Satya sort of unveiled to give Azure IoT Edge and intelligent edge, you start to have examples of a drone, scanning pipelines, looking for cracks or you're like you're starting to see -- and that was only just a year later, just sort of seeing how it would evolve. Now you hear about examples of drones swarms in Africa because just not doing that on the stage and build, but actually really happening in real life. And so it's pretty incredible. The one question I have [indiscernible] too is one of the things we talked about is potentially sort of a, call it, almost like a 3-tier model, you're potentially evolving, where you've got the centralized via cloud, i.e., Azure, you've got the device itself, maybe it's Azure ITS, maybe it's running via Azure Sphere, but we've also talked about sort of like the edge of the Internet, and this goes back to your kind of your new network question -- point. How do we think about, call it, a more distributed footprint? Because obviously, we talk about hyperscale when it comes to Azure, but then you also think about the device itself. Maybe it doesn't have enough compute power, but the centralized cloud and then maybe it's too late. Is there something kind of in between there? And then how do you think about sort of the distributed footprint for Azure relative to, let's say, what an Edge or a CDN vendor might be doing?

Yes. Well, you've certainly seen us continue to expand our global regions. We are over 60 now, and we're not slowing down. And so -- and that is for multiple reasons. But one is having -- be able to serve our customers locally where they sit from a performance perspective, but also from a data privacy, data governance capability, which has also become increasingly important. So both of those drivers are what's really catalyst for our continued global expansion into very broad regions of the world. So that's going to be an important part. Certainly, our work and partnership with the operators, right? And we even have today our edge zones in terms of how working with the operators around our edge zones, us, our own edge zone. So kind of continuing to expand even what the region looks like and certainly continue to see that evolve as well.

Well, now okay. We only got 2 minutes but I couldn't pass up this, I know you've been asked this question, the xCloud. The -- obviously, we've seen [indiscernible] market and all that, Azure can play with xCloud, especially with your Microsoft strategy where I call content came with Game Pass. Maybe talk about cloud xCloud, how Azure can play a role here?

Yes. Well, I mean, xCloud is possible with Azure. And so this to me is an awesome One Microsoft thing, where -- or from a gaming perspective, we -- our vision is to reach 3 billion gamers on the planet. And we want to make the Azure, the platform for it that's best for building game developers, right, like building your next fantastic game. And so xCloud from kind of world-class game streaming experience and the Xbox Game Pass, leveraging Azure behind that, obviously, makes Azure better. And even things about like our Xbox Game Studios, Minecraft, Halo, Gears of War all being built using Azure, makes Azure even more capable, but also help refine and think about what we offer from a game streaming perspective. So it is a place where being a first party in this gaming area actually is a wonderful kind of synergy with the platform powering it underneath. And the industry thing, too, it's not -- it's super useful in gaming, but some of these games are some of the most high performance, low-latency applications on the planet, right? The people's -- gamer's tolerance for any lag is 0. And so it really pushes the platform. It really pushes Azure. But it's also great for -- if you want to run an NASDAQ on the cloud, gosh, it has similar types of requirements. And so it does have transferable benefit to broader industry versus just gaming.

All right. Awesome. Cool. Well, it was super informative. Our 30 minutes went very fast. We touched a lot of things here. I think what was talked went pretty fast. So we were able to cover a lot. But Julia, thank you for joining us virtually. Like I said, it's super informative, and we'll be talking soon.

Awesome. Thank you so much for having me.