Satya Nadella, the Microsoft CEO, was reflecting on a significant missed opportunity for his company—the growth of Web search. From the interview, it appears that Nadella was stating that Microsoft had failed to take advantage of what now looks to be the largest online business model, with Google grabbing the opportunity and executing it to perfection.
Speaking on the matter of relevant technological shifts, he assessed AI's dramatic evolution and how corporations should be nimble to upcoming trends for the sake of their survival. He admitted that Microsoft did not see it that way, stressing the fundamental opportunities behind search.
"We missed what turned out to be the biggest business model on the web, because we all assumed the web is going to be all about being distributed. Who would have thought that search would be the biggest winner in organising the web?" he stated.
"We obviously didn't see it, and Google saw it and executed super well," he continued.
Principles of Tech Trends and Business Models
Nadella, speaking on the podcast of Dwarkesh Patel, said that identifying a technology trend is not enough; determining where value will be generated in that trend is critical.
"So that's kind of one lesson learned for me. You have to not only get the tech trend right, you also have to get where the value is going to be created with that trend. And these business model shifts are probably tougher than even the tech trend changes," he said.
AI and Cloud: Not Winner-Takes-All Markets
Moving on to the subject of AI, Nadella, replying to the question raised during the Interview, dismissed the claim that AI and Cloud computing are going to be markets dominated by a single player.
"I just don't see it because this, by the way, is the other thing I've learned is being very good at understanding what are winner-takes-all markets and what are not winner-take-all markets," he revealed.
Nadella stated that his past competition against Oracle and IBM in the client-server era had led him to learn that most enterprises prefer multiple suppliers instead of a single controlling player.
"Having competed against Oracle and IBM in client server, I knew buyers will not tolerate winner-take-all. Structurally, hyperscale will never be a winner-take-all, because buyers are smart," he said.
"The consumer market sometimes can be the winner-take-all. But anything that the buyer is a corporation, an enterprise, an IT department, they will want multiple suppliers. You have got to be one of the multiple suppliers," he further stated.
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