Exclusive: Microsoft’s president on its way ahead

Trying on the HoloLens – Microsoft’s new augmented reality (AR) device – I was instantly transported to a different world.

Regular objects strewn across the room acquired new life and I could even stroll in the middle of a very realistic holographic 3D visual of the galaxy.

The device, which is still in its testing phase worldwide, is a bold new step for Microsoft and indicates the company’s strong emphasis on new technology trends.

The fact that the Dubai Water and Electricity Authority is one of the first 10 companies worldwide that has been using the device also goes to show the importance of this region to the multinational giant. But while the HoloLens is impressive and has proven real-life practical value – especially on a commercial basis – the question remains whether it is viable and can become a mainstream hit on a longer-term basis.

“I believe these kinds of technology waves are here to stay,” says Brad Smith, president of Microsoft.

“I think these technologies almost by definition will improve and evolve over a number of years.

“Augmented reality creates a new way for people to interact with computing technology. It will enable people to visualise data in new ways – you can open up new opportunities in the way people communicate with each other around the world – so there’s a huge amount of promise.

“It’s certainly not a fad in my view, but it will take time. This is not a technology wave that is going to run its course in only 12 months. Things are moving very quickly. These are the kinds of technologies that will shape the next 10 to 20 years and not just a single year,” he adds.

In the cloud

For the moment though, the company is focussed on building and developing its core cloud computing strategy.

In the company’s fiscal first quarter, which ended on September 30, Microsoft’s net income reached $4.69bn, with the gross profit margin from its commercial cloud business standing at 49 per cent.

Smith, an industry veteran who is also Microsoft’s chief legal officer, emphasises that cloud adoption is accelerating across the world.

“As adoption spreads, customers are beginning to appreciate the clear benefits of moving to the cloud – they are seeing not only savings in terms of cost, but improvements in terms of security and perhaps most importantly, the ability to deploy more technology,” he states.

The early concerns about cloud such as the need for big investments and cyber security are no longer valid.

“The good news is that when you move to the cloud you don’t need to invest in new servers, computers and hence it is not a massive capital investment that is needed,” explains Smith.

“One can start by moving selected workloads and learn from that experience. So I think it’s a lot easier to scale a cloud usage investment than a traditional IT investment.

“Second, when it comes to security, the cloud is almost inherently more secure because it relies on technology that is always state-of the art. Microsoft is spending $1bn a year only on cyber security. And when a customer moves to our cloud for example, they get the benefit of all that investment.”

He adds: “I think customers are increasingly realising this and security is a factor that is now propelling cloud adoption rather than holding it back.”

The worldwide public cloud services market is projected to grow 17.2 per cent in 2016 to $208.6bn, up from $178bn in 2015, according to Gartner.

The highest growth will come from cloud system infrastructure services, projected to grow 42.8 per cent, while cloud application services are expected to grow 21.7 per cent in 2016 to reach $38.9bn.

IT modernisation is currently the top driver of public cloud adoption, followed by cost savings, innovation, agility and other benefits, Gartner said.

“Growth of public cloud is supported by the fact that organisations are saving 14 per cent of their budgets as an outcome of public cloud adoption,” says Sid Nag, research director at Gartner.

“However, the aspiration for using cloud services outpaces actual adoption. There’s no question there is great appetite within organisations to use cloud services, but there are still challenges for organisations as they make the move to the cloud.”

Security and privacy concerns continue to be the top inhibitors to public cloud adoption, despite the strong security track record and increased transparency of leading cloud providers.

“Public cloud services offered by the leading cloud providers are secure. The real security challenge is using public cloud services in a secure manner,” explains Ed Anderson, research vice president at Gartner.

“More education is needed to help organisations overcome the hype associated with security concerns. This should be a key area of focus for providers in working with their clients to unlock the benefits of public cloud services.”

Microsoft’s Smith also points out that a lot of countries lack regulatory clarity.

“We are seeing faster cloud adoption in the countries where the law is clear, more modern or at least where there are fewer legal concerns. So from that perspective, I think it is increasingly important for governments to modernise their laws.”

Artificial Intelligence: Tech of tomorrow

Looking towards new technology, another area where Microsoft is investing heavily is artificial intelligence (AI).

In a major collaboration, industry giants Google, Facebook, Amazon, IBM and Microsoft announced in September that they are creating a new AI partnership to address opportunities and challenges in the sector.

The organisation’s members will conduct research, recommend best practices, and publish research under an open license in areas such as ethics, fairness, and inclusivity; transparency, privacy, and interoperability.

They will also promote collaboration between people and AI systems and enhance the trustworthiness, reliability, and robustness of the technology, they revealed in a statement.

Called the Partnership on AI, the organisation does not intend to lobby government or other policymaking bodies.

The partnership’s founding members will each contribute financial and research resources and share leadership with independent third parties, including academics, user group advocates and industry domain experts.

There will be equal representation of corporate and non-corporate members on the board, they said.

A day after the announcement was made, Microsoft revealed that it had formed the Microsoft AI and Research Group, bringing together more than 5,000 computer scientists and engineers focused on the company’s AI product efforts.

With so much research and investment going into AI, can we expect the market to soon welcome a slew of new inventions?

“I think you will increasingly see products that have AI components – you’ll see bots that you can speak to in a more conversational way, that will perform tasks for you and bring you back the results. The results may be information or answers to questions,” says Smith.

“You are going to see the roll out of these kinds of AI instruments very rapidly. But at the same time I think we are going to see new AI inventions over the coming years and even decades.

“So in effect, we will see AI become increasingly powerful and increasingly more vast in terms of the things that it can do. I do think it is important for people not to have expectations regarding the timeline. We’ll see interesting things right away, but we’ll see even more important things over time,” he adds.

Middle East: Regulatory framework is key

When it comes to the actual adoption of new technology, if there are no laws in place or there is not adequate regulatory clarity, there is a risk that adoption will suffer, warns Smith.

The Middle East has begun taking measures to put the regulatory framework in place as several countries and cities embark on ‘smart strategies’.

“One of the things we hope is that governments in the Middle East will look around the world, identify the most current and best practices when it come to laws to protect security and privacy, for example laws to promote electronic contracting and the delivery of payments and services, and embark on modernising their own laws,” says Smith.

“I think if that happens, it will help accelerate the use of technology across the region.”

Overall, when it comes to technology adoption, people tend to focus on two things.

“Is it technology that people can trust? That requires both the technology companies to do a great job of building the products and services and also requires that governments to modernise the laws,” explains Smith.

“The other big question is whether technology is going to fuel inclusive economic growth. I think across the Middle East and around the world, technology is creating jobs that will require new skills and so one of the challenges is how to equip people – both young and old – with the new skills that will enable them to take advantage of this new technology and promote their own companies and their jobs and their skills.”

What’s coming in the next 15 years?

“I think in the next 10 to 15 years, you are likely to see a few things that you don’t see today,” predicts Smith.

“You are likely to see more cars that are driven by computers and hence fewer cars that are driven by human beings. What percentage of cars will be driven by computers versus humans remains to be seen, but it clearly will be a higher percentage when compared to today.”

He also expects improvements to AR hardware devices and “tremendous advances” in software that will make the technology more useful and powerful to people.

Smith’s third prediction is that there are going to be more data centres in more countries worldwide with cloud computing also becoming commonplace.

“Finally, in 15 years, we will probably see wearables that are smaller, that are in some ways almost a part of the clothing or other things that we connect to ourselves.

“In short – it means computing is going to be even more ubiquitous, it’s going to be more powerful and hopefully it is going to be more useful to people.

“And I think that’s the ultimate purpose for our industry – we need to pursue technology not only with the goal of obviously growing its adoption rate, but really pursuing a path that makes it more useful for humanity around the world,” he stresses.