Tech Transformers

Microsoft well-positioned to beat Amazon in the cloud, but it's 'not a birthright', ex-CEO Ballmer says

Key Points
  • Steve Ballmer says Microsoft has strong products in Azure and Office 365 but the competition against Amazon Web Services will be tough.
  • Ballmer also says Google could challenge Microsoft's Office 365 product.
  • The former CEO says he keeps in touch with his successor, Satya Nadella, to give product feedback.
Steve Ballmer: Microsoft's cloud position is 'not a birthright'

Microsoft is in a good position to take on Amazon in cloud computing but the company still has "a lot of work to do," ex-CEO Steve Ballmer told CNBC on Tuesday.

The owner of the Los Angeles Clippers NBA team said his former company has strong products in Azure and Office 365 but that the competition against Amazon Web Services will be tough.

"I think the company is well-positioned, on the other hand (there is) a lot of work to do. I think that on the cloud side with Office 365 and Azure, the company's got a real shot but not a birthright. They are going to have to push very hard with Azure versus Amazon Web Services," Ballmer said.

Steve Ballmer
Cameron Costa | CNBC

Ballmer, Microsoft CEO from 2000 to 2014, said that while Amazon is a direct competitor to Azure, it's Google that could challenge Microsoft's Office 365 product.

"With Amazon Web Services, Azure is the challenger, it has only one way to go, which is up. With Office 365 there is more upside than downside, and that's a Google risk," Ballmer said.

Microsoft's cloud division has been growing fairly strongly, and it's an area current CEO Satya Nadella has flagged as the company's future. Microsoft's cloud business brought in $6.86 billion in revenue during the fiscal second quarter. Azure revenue increased 93 percent.

The U.S. technology giant has also been focusing on hardware, pioneering new product categories like the 2-in-1 tablet called Surface and recently announced its next games console called Xbox Scorpio. Ballmer said he was "most pleased" with the progress in the Surface line of products, and the hardware division has "progressed nicely."

Steve Ballmer: I 'fire off' product feedback to Nadella

Ballmer is still a major shareholder, but did not reveal how many shares he holds. However, he said he is "delighted" at the current price of the stock, which is trading over $65 per share and has seen a more than 17 percent rise in the past 12 months. Ballmer revealed that he made "some adjustments" to his holding of Microsoft last year to help with his philanthropic work, without giving specific details.

The former CEO said he keeps in touch with Nadella to give product feedback.

"I'll fire off essentially product feedback to him. … If we are seeing something that doesn't seem right to us in Skype or one of the other products, I'll drop him a note," Ballmer told CNBC.