Filter Events:
Goldman Technology and Internet Conference
Who: Julia White, CVP, Azure Marketing
What: Goldman Technology and Internet Conference
When: Tuesday, February 12, 2019
HEATHER BELLINI: Thank you, everybody. Thank you for coming today. I really want to thank the Microsoft team for coming, because, for those of you who may not be watching the weather in Seattle, they've gotten hit with a ton of snow over the last week, and I know this was a Herculean effort to get here.
So I want to thank Julia White for coming, she's the Corporate Vice President of Azure Marketing. She's been with us before. It's always a great session. We really appreciate you taking the time to be here.
I guess the thing we get asked a lot is just kind of, where are we in the transition? If you go back to two years ago, five years ago, people would have thought by now, 100 percent of workloads, everyone's always more optimistic, would be in public cloud. And depending on what stats you look at, we're far from that. But the market has been growing very aggressively.
How do you think about where we are in the transition?
JULIA WHITE: Yeah. There's a couple of different angles on it. I would say while, in general, the cloud option is great and it's definitely growing and we're moving into even late stage adopters, the percentage of the IT and the applications being built and migrated going to cloud is still pretty small. We still have a lot more to go. So while most companies today have some workloads or they're migrating to the cloud or building new in the cloud, it's still not the majority of what they're running.
But I do think a couple of things have changed. We definitely have moved from seeing kind of the mid-tier and early adopters moving into cloud and getting kind of the first workloads into the cloud into even the very late stage adopters. So I think we've still made kind of a cycle of a customer type. We've definitely pushed even farther, and interestingly in the past year we've had some conversations, some really basic cloud conversations all over again, because this next wave of adopters has started to come in on that front.
HEATHER BELLINI: Right. So when you think about workloads on Azure, what moved there first and I guess you have to think of it by cohort, like you just mentioned. So the early adopters, what are they putting in Azure today that they wanted a few years ago, and do you see the uptake of the technology, kind of the migration, changing now that people have been able to learn from the cohorts before them?
JULIA WHITE: There's the type of adopter. But then I think the overall TAM for Azure and public cloud is two things. One is applications that exist today that can migrate to the cloud or net-new applications being built. So you have migration and then we have innovation, two basic ways to look at it.
And if you go back, the early, early cloud adopters was innovation, net-new things. They didn't have a lot. And actually some of the early Azure workloads that came, a new mobile app, a new system being built. And then you move into the wave of like actually I get it, cloud, I'm really going to start migrating my existing stuff, my mission critical, my business area. And I'd say if you went back three years the migration workloads looked like backup, disaster recovery, non-mission critical line of business systems.
Now the migration pipe is as good as the innovation pipe, we've kind of normalized on that because of the types of workloads, and then within the migration you're seeing things like SAP, huge pipeline, mission critical systems running on Azure. Microsoft is running our own SAP system on Azure as a proof point. So we definitely moved out of kind of lower tier, tier two, type of workloads under migration in terms of the tier ones. So I think on both fronts the balance between innovation kind of workloads and applications and migrations has normalized, which tells you things are kind of shaping to the whole market.
And then the level of sophistication of what's migrated has also increased. But you know it's still early.
HEATHER BELLINI: I don't know to the extent you guys kind of talk about this, but if you can give us a way to think about, you were just kind of going down this path, but like IaaS versus PaaS penetration in Azure? So meaning of Azure workloads what percentage of them or revenue how much would be PaaS versus IaaS? How do you think about that moving higher up?
JULIA WHITE: The way I think about it and I would encourage others to think about it is, think about it by the workload or application customers are using. And if it's just a straight migration, you're going to use core infrastructure.
And then even a couple of years ago people would just say, I'm just going to migrate and then leave it alone. I don't actually meet a customer who talks like that anymore. Walmart is a great example, they started just migrating and then they're like, we don't do that anymore, we modernize everything that we're bringing over because we see the efficiencies we get.
And when you say "modernization" what does that mean? It means I'm using more than just "infrastructure." I'm using things like your developer services, your data services, managed services to get the greater efficiencies of the cloud as well as you're now taking advantage of what we talked about as cloud-native services that were built from the beginning to have this incredible scale, super-efficient, great user experiences.
So I would say from the overall pipeline, we have a lot of people just migrating in infrastructure, but then almost immediately after that the modernization work happens. And that's when these platform services and data services start getting consumed.
HEATHER BELLINI: So you've been involved in this business for quite some time, if you take a look at kind of the marketing message that you would help the team create, when you're looking at your competitors and kind of going through the pros and cons or the competitive differentiation, what does it look like today? How do you feel your competing and what are the strengths and weaknesses that you talk about?
JULIA WHITE: I think that we'd talk about but also we hear back from our customers, because then it would just be us talking about, first I would say hybrid has been for a long time a huge differentiator and our belief that compute will be distributed, not just all in public clouds, it will be distributed on premises as well, and that's true in what we talk about as hybrid with data center and cloud, but even as we know eventually more of the intelligent edge and more distributed compute. And so building consistency around that area, so we can certainly talk more about that.
And then the next one would be, overall, we talk about productivity, and this is again a point of view that we came -- we, because of our heritage, know that customers have a varied range of technology skillsets and technology teams. And so we built in the management tools, built in the developer tools, built in policy such that as people were moving to the cloud, they didn't have to learn all this tooling again. It's just built in so all the systems are there. So the productivity message certainly resonates.
And the last one is actually really increasingly around trust, and that's trust of our security, our compliance, our privacy. We have more accreditations and attestations than the other public clouds, certainly important, but it's even father now to trusted vendor and that we're very transparent about what our core competencies are, what businesses we're in. We're not going to turn around and compete with our customers. And that's obviously a big thing that we hear about from the market as well in terms of overall trusting Microsoft as a partner.
HEATHER BELLINI: And Amy has talked a lot on the earnings calls about enterprise mobility being included obviously in the Azure line and just the strength of that business. And we kind of think of that as maybe more of a SaaS application running on top of that. How do you think about the other types of SaaS applications and the reason why we care about it is because it has higher gross margins, so how do we think about kind of the how you can expand those other touchpoints within Azure, SaaS touchpoints within Azure?
JULIA WHITE: So enterprise mobility, or EMS, is a set of Azure services that we then sell as more of a per user kind of stat, it's to protect the user on their device and their apps. And so kind of that package that really actually goes to market with our Microsoft 365, so it's a great opportunity there.
But other areas, honestly, all of our data services really fall in that class of kind of higher-level services. And that part of the Azure business is incredibly healthy. So we see a ton of opportunity in that class of services, and again it's about customers moving to the cloud and one of the biggest problems they're trying to solve is around their data estate with operational data but also analytical data, particularly everyone has an AI strategy, everybody. And what they do, I've got to use AI, I've got to create AI in all my applications and my systems. And then I get all these dreams about AI. And then they go look and they're like, I have no data. My analytic systems are old and rigid.
HEATHER BELLINI: How to do AI without the data.
JULIA WHITE: And so quickly they pivot to, oh, gosh, we've got to work on our analytics, our data warehousing, our data lake. And so that part of our cloud growth is phenomenal because if you're going to go build AI, you're not going to build a data estate and analytics system on premises. It just doesn't make sense. That part is, I think from the more higher-level services --
HEATHER BELLINI: We probably don't hear as much about that one on the earnings calls, but it would seem like that would be one that's on the comm then in terms of what we should be -- a little less EMS maybe just given how well you guys have done there and more in this area.
JULIA WHITE: Yeah. I mean if you think about the overall growth, EMS we're at 94 million paid users. It's a huge business, phenomenal. We love it. But it does at some point slow at that scale. Where the data services and other areas of Azure we're still putting up triple-digit numbers on really big businesses.
HEATHER BELLINI: Right. And that's the other question that comes up a lot, I'm interested from your perspective, the investors, the consternation every quarter about whether Azure growth is 74 or 76. A lot of market cap trades on very small difference in percentages.
JULIA WHITE: I know. Amy reminds me about that all the time.
HEATHER BELLINI: I'm sure she does.
What do you say to people who fixate on that specific number?
JULIA WHITE: It is an important number. So it's not a bad one to pay attention to.
HEATHER BELLINI: Right.
JULIA WHITE: But you have to keep it in perspective. I mean Azure is a massive business. And the way we report is also inclusive of the EMS part of the business, as well, so in the per user that will have a graduating growth aspect to it, as well. And then if you unpack behind that number, there is incredible growth within it. I'm thinking about the data service is like a triple digit growth and those are huge, huge new industries that we're going into.
So, yeah, a business of our size you're going to see growth moderate. And I always feel bad in internal reviews. We have very high expectations. Amy has very high expectations. And I take beatings for these businesses that are multimillion-dollar businesses and they're only growing at 100 percent. And I'm like, god, where does this happen. When I went to business school no one told me how to grow a multimillion-dollar business at 100 percent. Here we are. So we're the dynamics of it.
So feel good about a couple of things. One, the new businesses we're entering into, whether it be analytics, you're going to see over the next quarter additional places we're investing in and new businesses we're crashing into. I mean we've effectively got an unlimited TAM that we're playing with for the majority of Azure. EMS has a per-user cap to it, but from an IaaS and PaaS perspective very unlimited. It's more about operationalizing it well, capitalizing on it well. So, yeah, you'll see the growth continue to stabilize, but in really high numbers.
HEATHER BELLINI: How do you do internal benchmarking on your Azure performance, like how do you know, like how do you determine, how do you make Amy happy? Are there certain benchmarks you look at? Is it AWS' growth rate? How are you kind of grading yourself on that segment?
JULIA WHITE: Yeah, obviously it's the triangulation of a few different areas. Certainly looking at what other vendors have been growing and rates at the same point in time for their lifecycle is certainly one way to look at it. Looking at what the size and shape of the existing on-premises equivalencies would be, and then how fast is that moving. And then we see just early signals in terms of if AI is going to be true then this type of data doc needs to be happening and so working back from what we see from a market signal perspective.
HEATHER BELLINI: Right.
JULIA WHITE: So I'd say looking at those three. It's a little bit of an art, obviously, when we're talking about an unlimited TAM type of business. But we do -- every time we think we put up aggressive numbers Amy kind of pushes us a little harder, which is her job. And we'll keep trying to do it.
HEATHER BELLINI: So one question that started to come up over the last few months was there was this I guess idea that sales people were getting paid to pre-sell capacity, so getting paid quota to pre-sell capacity. And this might not be kind of your area of expertise, but just kind of how do you think about how the go to market has changed and we're always told that the process of getting paid pre-usage, right, changed a few years ago and now it was more like, look, the sales people are focused on consumption. How do we -- what can you share with us about kind of how the go to market has changed and potentially how compensation strategies have changed?
JULIA WHITE: Yeah, it was a three-year journey where we took our sales force from being paid on build revenue, so selling Microsoft 365 licenses or Azure commits to being purely paid on consumption, kind of graduated each of the years. We are 100 percent based on consumption now. So, any Microsoft sales person who is paid on Azure, it's about consumed revenue.
So if a customer chooses to say, hey, I want to give you a million dollars up front and I'll use it over the next year, that sales person doesn't see a million dollars on their quota. They see it as it gets consumed through the year. So 100 percent true on that. The company will still recognize if a customer chooses to bill up front. And it's interesting, we had polled and done so much field retraining to get out of this build motion, get rid of that muscle memory and go to consumption. And then actually customers were like, no, no, I actually kind of like to buy and lock up my dollars. So if there's actually a customer, of course we'll take their money that way. But that's not how the sales people on the front lines are actually being recognized. And that's not how we also incentivize or compensate our partner channel either, on consumed revenue.
HEATHER BELLINI: Okay. And I wanted to spend a little bit of time on Azure Hybrid Benefits, which seems like you guys are uniquely positioned to offer this bring your own license movement. Can you talk to us about when this really started to make its way into the market and what the feedback has been? When did you start to see customers have that moment where they said, okay, this is great?
JULIA WHITE: Yeah, so this is for context. We have Azure Hybrid Benefits. So if you're a Windows Server or a SQL Server customer you can, if you have Software Assurance, Hybrid Benefits allows you to basically run your Windows Server, SQL Server in Azure and you don't have to repurchase the IP when you do that. So it's a fantastic advantage for -- it kind of gives the on-premises customers and the buyers of Windows and SQL a kind of insurance plan, because most people know they want to go to the cloud in the next generation. And then I'll basically give Azure a wonderful price advantage in terms of being able to run it with the same IP that you've already bought.
HEATHER BELLINI: And when did that go into effect?
JULIA WHITE: I was going to say, I think we're now in our second year officially of when that program landed. But it took off in a couple, mostly about 18, 12 months ago. We really saw adoption crank up. There's just awareness, people buying it. And then also we operationalize it in the product itself. So when you're in Azure you go to deploy a virtual machine that says, hey, you have Azure Hybrid Benefits, so it also just made it really frictionless for our customers to take advantage of that. But we're seeing a huge benefit in both our on-premises licenses, because of the benefit it adds to those customers, but also our pipeline of Windows and SQL applications migrating to Azure is fantastic.
And the other aspect of this, too, we have the Azure Hybrid Benefits. But we also have our Windows and SQL Server 2008 product that's going into extended support. It's 10 years old. That means it's going out of mainstream support. So, customers are faced with two options. One, they can buy extended security updates for about 75 percent of the cost of a license, or they can move and run it on Azure and get that for free. So it's a secondary benefit for the 2008 install base, which is the largest install base we have.
HEATHER BELLINI: Right and is that -- do they have to pay that per year if they stay -- saying they want to do it on-premise and paying the updates.
JULIA WHITE: It's 75 percent of the license for three years.
HEATHER BELLINI: For three years and after that you have to do something.
JULIA WHITE: Then you get some agreement after that, yeah. It's not a pretty road. And in general, it's a good -- it's just a good catalyst. It's not actually that different than what's happening on SAP, where everyone on SAP has to move to HANA by 2025. That is a huge catalyst of people saying, okay, I've got to touch my SAP system. Am I going to move to HANA, am I moving to the cloud? Again, we see phenomenal pipeline around SAP systems moving to Azure I think with that catalyst. And the 2008 extended support, end of support and security updates is another one of those, so two big growth opportunities for the business.
HEATHER BELLINI: And how do you feel -- like we didn't talk specifically about AWS before, but how do you feel you've closed the functionality gap relative to them over the years, or do you not think about it that way?
JULIA WHITE: I'd say what's reflected in the customer and partner conversations it's for the most part now people say we're equal, the analysts, the customers. And the interesting thing is most customers I go to it's like, oh, you're missing this feature, but I know you're going to have it soon enough, or AWS is missing that feature, but they'll probably get it, too. So it's pretty normalized from a pure technology perspective.
There's places that are materially different that come up, hybrid, that category thing. We have a bunch of stuff they can't touch, so a few aspects like that. But otherwise it's pretty normalized from that perspective. And then it's more into AWS obviously they were out first. They're a leader. They get the benefit of that doubt. When I was leading the Office 365 business, I had that luxury. So I know what it's like where we have to hunt a little harder on the Azure side.
But I see the trust factor comes up a lot and I think that it's one of those intangibles. But if you partner, in a partner meeting I had this morning, where like I used to work with AWS, but now I don't. I worry they're competing with me. That's just a very real concern. I'm proud of the work we've done to be very transparent about our plans, our core competency, what we're doing, what we're not doing such that we've had 40 years of having to build trust, we know what that looks like.
HEATHER BELLINI: So there used to be a good bit of Windows revenue, or Windows workloads running on AWS. Should that -- like, what happens to those going forward? I mean that was before maybe you became as strong as you guys are. What's the trend in Windows workloads running on AWS and do you find -- is there a way for you to kind of shift those workloads back to Azure?
JULIA WHITE: I don't have their numbers obviously. I can see mine and the pipeline --
HEATHER BELLINI: They must send you a check, right?
JULIA WHITE: Yeah, but there are certain boundaries.
HEATHER BELLINI: Amy knows best.
JULIA WHITE: But I would say that I would be shocked if their pipeline to Windows SQL is better than ours, despite them being bigger, obviously, I think we have phenomenal growth and we have just very, very differentiated opportunities on that front.
Taking applications off of a cloud to another one, honestly, it's a place where we could spend a lot of time and our competitive nature would want us to, but I'm like the white space in the TAM of this business is so big I don't actually encourage our sales people to focus a lot of energy on that. But customers like, hey, I can't trust AWS, or I can find better efficiencies than you, we'll see a switch. But it's not necessarily the place I'm actively hunting down and trying to go pull off of it.
And I mean the other aspect between us and AWS is it's a multi-cloud world and I think we've expected that. If you look at on-premises today it's very heterogeneous and I don't think the cloud will be any different. And I see people making different decisions around, hey, I'm going to do new innovation this cloud and I'm going to do a migration on this cloud.
It's really the customer's mindset for the most part is department or application by application. And so they can do best of breed, they can want to kind of spread their estates across different vendors for vendor control, vendor lock-in concerns, a lot of different things. So even though a customer might have a Windows SQL application on AWS, that doesn't mean they're not going to put their next one on Azure and it will be blended. I expect that to continue to be true.
HEATHER BELLINI: What is your take on AWS Outposts?
JULIA WHITE: It's heartening. It was funny to watch, they wouldn't even say the word hybrid. They would literally not say the word. And we were like, that's so weird. But I guess if you only have a cloud, if you only have a hammer everything is a nail. And we've been talking about hybrid for five years. We've had Azure Stack in market for over two years and they finally uttered the word hybrid and now it's Outposts. And I even laugh a little bit at the name like Outposts, like you're not serious about it. It's some like you're having to do. The way they named it even tells you how they really feel about it.
But I think it's interesting. It's not Azure Stack. People are now trying to compare. First of all, it's not in market. I think it's a year out. It's definitely different than what Azure Stack is, which is a full kind of integrated cloud system that you can run locally. This, from what I can see, looks like they are kind of platform layer services built to run on existing infrastructure in kind of a managed way. We'll see how that turns out.
I think it's kind of like welcome to reality. Customers are hybrid. They'll need hybrid. We just need to see how they play on that. And, again, it's different to try and do it after the fact, to have a hybrid offering, versus built from the beginning. We have identity, we have data, we have management, all hybrid.
HEATHER BELLINI: I want to see if there's any questions in the audience. There's one.
I think there's a mic runner. Hold on, he'll be right there.
QUESTION: I think there's a perception that you guys are very strong in large scale enterprises, like you've talked about hybrid, your reliability, your long-scale trust. How are you positioning yourself with the other companies, with startups, so that you're relevant for that next generation of companies?
JULIA WHITE: Yeah, if you look at, for instance, a segmentation perspective, if you look at the Azure business we're actually very equally distributed across small business, mid-size enterprise and large enterprise from a consumed revenue perspective. So it's maybe more balanced than people might think. We obviously are very strong in enterprise, but overall, very, very healthy in small business, as well. So we feel great about that, feel great about the vision and the growth rates and actually seeing really strong in our SMB kind of our web direct business, super strong.
So, to your question on startups, we have a couple of different initiative, very targeted at startups and we have reactors and kind of co-innovation centers around the world. We also have investment programs where we provide to startups not just money, but resources. And then actually the thing that most startups are interested in working with us on is we do go to market with them.
So if you come and you work with us and you have your technology running on Azure, then you earn your right to be able to be co-sold by our sales force, which is a huge lever for a startup. And so you obviously earn your way to that level, but the idea that you could be suddenly sold by 50,000 Microsoft sales people across the globe is pretty impressive. So we're seeing strong demand from that specifically.
If you go back a couple of years ago, us, AWS, GC were all throwing out a bunch of credits to startups and I think mostly burning money. They would just move from one program to the next program and use credits and then leave. Where now we have a much more focused value add, a two-way value add program with startups specifically. So feel good about our pipeline there. And obviously if it's a B-to-B startup, they love us. If you're B-to-C you don't have quite as much, just because our global sales force isn't necessarily focused on that. But that's okay.
HEATHER BELLINI: Any other questions?
There's one back there.
QUESTION: Hi, I had a bit of a pickup whenever they would talk about the fact that Microsoft offers solutions and they don't compete with customers. When Heather asked that you essentially said you don't go chase these kinds of customers. Am I missing something here?
JULIA WHITE: I didn't hear that very well, so one more time.
QUESTION: I guess what I'm trying to ask is I detected a pickup in the tone from management recently about Microsoft not competing with their customers, whereas you said that you don't really chase customers, per se, which Amazon may be competing with?
JULIA WHITE: I'll tell you what I'm seeing and see if that answers your question, perhaps. I would say things like retailers and financial services companies now and now into healthcare seeing Amazon go into those businesses and saying, gosh, am I going to give money to people who are now competing with me, and more than money actually the deeper issue is data. As you're running your systems on a cloud, they have a sense of the data, where information is coming from. It's information you probably don't want to share with someone who is competing in your same space.
So I think that's the thing that I see come up most often and why you're seeing like Kroger and Walgreens and Gap and lots of companies now moving actively to Azure to distance themselves from basically feeding the competition. So I don't know if that answers your question.
QUESTION: You mentioned some of the difficulties of converting an AI strategy into reality. I'm wondering are you seeing that in any of your AI compute offerings that actually everyone wanted to say that they were going to use all of this and actually the reality isn't quite as strong as you thought?
JULIA WHITE: Yeah, as in lots of other technologies, a hype cycle. And then so everyone got very excited about AI and they're still excited. If I look at our executive briefing center, AI is the number one conversation customers want to come have with us which just tells you the index on that.
And as people say, great, I want to do AI. There are two things in AI. There are models, AI models that have been prebuilt. We prebuild them with all the data and resources we have. So like computer vision, we can detect that this is a shoe versus a water bottle. And you can just use that AI model in your application and you don't have to do a lot. We've seen a lot of adoption of those prebuilt models, right, because if I'm building an application, I can just take advantage of that AI model.
Then there's the more sophisticated, which is I'm going to go build my own AI models to power my supply chain or to predict customer behavior, and that's where you need to get into data scientists who are going to be using very specialized compute to be able to process and run those kinds of algorithms in high fidelity. And that's a much more complicated conversation and it tends to start with they dream of doing it, but they don't have the data scientists. They don't quite know what they want to do yet. So that tends to be much more about analytics, getting the data science basics, and then taking advantage of the compute that we have available for it.
So there's kind of two classes. There's the prebuilt AI models they can use and then building their own and the capability around that.
QUESTION: And how do you plan your end of capacity that and a wider question, how do you plan capacity for the such strong growth?
JULIA WHITE: There's a lot of science in that. So it is a combination of, first of all, where globally we see the demand signal, and we obviously have lots and lots of models around how to predict demand and where it's going to be coming rom. But then we also do, we have very good visibility into our sales pipeline, both from our direct field but also from our partners of the type of applications or the type of workloads people are coming on.
Like SAP has a certain type of compute that we know we need, and we have a pretty good sense of where it needs to be distributed. AI was one, because it's still early, that's a little harder to predict. So that one we have probably not perfect capacity utilization on that one just because it's so early. It's not a big part of our fleet either, that's a kind of specialized compute. So it's not like being wildly off makes a lot of difference in the margins, but that one is a little bit harder.
HEATHER BELLINI: I wanted to ask about container adoption and the interest in serverless. What are customers saying to you about both of those?
JULIA WHITE: Yeah. So in the kind of higher-level services, basically my simple way is there's two classes, there's data services and then there's the kind of developer platform services. So containers and serverless that we talk about is on more of the developer.
Back to the application on premises, they migrate, then once they migrate the very first thing you do to modernize is move to containers. And like the world has chosen Kubernetes and containerization and using this technology called Kubernetes to do it. If you go to a Kubernetes Conference they are selling out. It is mainstream, average companies. It's gone from being elite tech to being everybody's choice. So that is absolutely the next wave. It is core to every modernization project I've seen. I expect it to continue to be how we're doing it internally. So I think that is a very real trend.
And on serverless, there's a lot of confusion around what is serverless, what does it mean? And people have started talking about it as event-driven. Kind of this thing of like, hey, an action happens, an outcome, you make another action. And we look at serverless as basically how PaaS works. So we talk about serverless, we don't really say PaaS anymore. It's like anything that doesn't require you to manage the compute and networking and storage underneath. And that all comes into play when you're doing modernization or net-new innovation applications. And I think that's a strong trend on that side of things.
HEATHER BELLINI: So does that become deflationary to an extent, because we went to cloud four or five years ago. We were deploying PaaS and buying reserved instances, for example, for periods that we might not be using it for. We wanted to make sure it was always available. And if you move to serverless, you only have to use it when you need it.
How do you think about the deflationary aspect that it could cause on someone's IaaS and PaaS infrastructure versus kind of how much it could ignite even more spending, the additive, and create new use cases and new applications?
JULIA WHITE: Yeah, I think you would theoretically say, gosh, it's going to be deflationary because everything is going to shift over there and everyone is going to get super-efficient in how they use it. I don't see the reality moving quite like that. And if you look at, if you classify both data and developer services, and that the data services are growing incredibly hot. And you shift to the core infrastructure where they're running and kind of make it up in data even if it's kind of more deflationary on the developer level.
HEATHER BELLINI: So on a collective basis it's net increase in spending, it just depends on how you're allocating it.
JULIA WHITE: Yeah, I do think there was -- as we've gotten more sophisticated in what serverless means and the technology, there are different types of it. And things like our event-driven, it's super-efficient from a customer perspective, very low cost. Awesome. It's hard to run systems on event-driven technology, really hard. Like if you really know what you're doing and you build a brand-new app, you can totally make it work with event-driven only, but there's not many people on the planet that can do that or really want to.
HEATHER BELLINI: Right.
JULIA WHITE: So the theoretically possible versus what I think is actually going to happen looks a little differently, and it will be much more of a balanced approach in how people use the technology.
HEATHER BELLINI: I saw him standing there, was there a question here? No. Okay. I saw the mic runner.
We had Thomas Kurian who is now CEO of Google Cloud here earlier this morning. I was wondering when you're doing a competitive analysis or when you're hearing feedback from customers, how does GCP fit into the equation?
JULIA WHITE: Yeah, I'm more like outside in when I see. I'd say almost every conversation, customer, partner is AWS/Azure. I expect that in every meeting and every discussion. I see GCP occasionally and they mostly show up, like I was just in France, the conversation there of, they tend to come in -- again, I'm just reflecting what I see more than anything else.
HEATHER BELLINI: How Microsoft views what customers are telling them.
JULIA WHITE: Yeah, or what I see, just the reality is, they come in with -- in a different way maybe through the CMO from AdWords or their G Suite, and then kind of buy the GCP usage from that. And so it's more of kind of a roundabout way to get into those accounts and more by the business. And I think if you're early and trying to get enterprise wins, you're going to go by the business. So that's more what I see come in. And it's not frequent, to be honest. It's geographies I see a few places.
HEATHER BELLINI: Last question I had was about GitHub and the role that you see GitHub playing in expanding your developer audience. How do you think about GitHub and how it fits in?
JULIA WHITE: And that's more at a Microsoft level, right, in terms of being an incredible developer resource. Tens of millions of developers, 100 million repositories, and a wonderful open source ecosystem, and so in terms of Microsoft and developer relevancy it's a wonderful asset. It will continue to be run independently like you've seen us do with LinkedIn or Minecraft and still have very independent capabilities and decision making and autonomy, which is really important. And we deeply understand and value that.
And yet we also see this opportunity to help customers. So as an example, we put an offer together that allows our enterprise customers to buy GitHub enterprise on Microsoft licensing. And it was not a big promotion. We just kind of put it out there. And we've just seen an incredible adoption of it. Customers are begging. GitHub's enterprise offering wasn't really done in an enterprise way, the way Microsoft was. And so customers were hungry for that. And so we just did a great pretty simple thing for them. It got easier like crazy. Now I can do all this with one thing.
So where we see great customer benefit and a natural affinity, a wonderful opportunity together. We're not going to be heavy-handed or jamming Azure on them or anything.
HEATHER BELLINI: Great. Thank you, Julia. Appreciate it.
Thanks, everybody.
END
Upcoming Events
JP Morgan Global TMT Conference
Jefferies Software Conference