Microsoft CEO speaks of world cloud manufacturing facility as Azure stalls

The day Microsoft CEO Satya Nadella mentioned the corporate’s “planet-scale cloud and AI manufacturing facility”, Azure cloud – the IT infrastructure underpinning this – was offline for greater than eight hours.

In keeping with the corporate’s newest quarterly outcomes, Microsoft Cloud income surpassed $49bn, a rise of 26% in comparison with the identical quarter final yr.

Total, Microsoft posted income for $78bn, up 18%. “We’re seeing rising demand and diffusion of our AI platform and household of Copilots, which is fueling our investments throughout each capital and expertise,” Nadella stated throughout the earnings name.

Nadella stated that Microsoft now has 900 million month-to-month lively customers of AI options throughout its merchandise. The corporate reported a rise in capital expenditures to $35bn, pushed by rising demand for its cloud and AI choices.

Chief monetary officer Amy Hood stated: “This quarter, roughly half of our spend was on short-lived property, primarily GPUs [graphics processor units] and CPUs [central processor units], to help rising Azure platform demand, rising first-party apps and AI options, accelerating R&D by our product groups, in addition to continued alternative for end-of-life server and networking gear.”

There’s additionally long term expenditure, which incorporates $11bn of finance leases which are primarily for giant datacentre websites.

Talking concerning the firm’s want to purchase extra CPUs and GPUs, Hood admitted Azure can be “capability constrained”, including: “We’ll proceed to steadiness Azure income progress with the rising wants throughout our first-party apps and AI options, our personal R&D efforts and the tip of life server replacements. Due to this fact, we now anticipate to be capability constrained via at the least the tip of our fiscal yr.”

As workloads pivot from CPUs to GPUs, Hood acknowledged has meant the corporate has struggled to maintain tempo. “We’ve been quick now for a lot of quarters. I assumed we had been going to catch up – we aren’t. Demand is rising. It’s not rising in only one place, it’s rising throughout many locations,” Hood added.

Commenting on the Microsoft outcomes, Forrester’s principal analyst Tracy Woo stated: “Microsoft delivered on expectations, however its degree of AI funding is trigger for concern. Common enterprise AI spend is considerably decrease than anticipated – due partly to restricted production-ready use circumstances. This may change, however resizes the query of whether or not Microsoft has invested too closely and too early in AI.

“For now, the corporate is benefiting from the AI hype, and cloud income has made appreciable features to AWS income lately is promising as Azure turns into a significant income engine for Microsoft.”

Only a few hours previous to the earnings name, round 15:45 within the UK, the Microsoft cloud skilled an outage, which affected clients globally together with quite a few main retailers within the UK.

The corporate stated that the foundation explanation for the outage was “an inadvertent tenant configuration change inside Azure Entrance Door [AFD]”. This triggered a widespread service disruption affecting its Azure clients whose IT makes use of AFD for world content material supply.

“The change launched an invalid or inconsistent configuration state that prompted a big variety of AFD nodes to fail to load correctly, resulting in elevated latencies, timeouts and connection errors for downstream companies,” Microsoft stated.