Microsoft CEO Satya Nadella on Wednesday said he wished that the company had gotten into the public cloud business earlier.
Nadella, who ran Microsoft's cloud and enterprise business before becoming its CEO in 2014, made the admission to Marty Chavez, executive vice president and chief financial officer of Goldman Sachs, during a conversation streamed live from the bank's Facebook page.
Microsoft launched its first Azure service in 2008, two years after Amazon introduced its core cloud computing and storage resources. Today, Amazon Web Services holds nearly 32 percent of the public cloud infrastructure services market, while Microsoft has about 14 percent, according to Canalys.
Over the years, Microsoft had built up a major server software business — which it stored on companies' premises, Nadella said. Then came AWS — which forced Microsoft to rethink its whole business model.
"We knew by looking at what Amazon was doing that we needed to reinvent ourselves, and by the way, the margins were going to be very, very different -- tough challenge," Nadella said, in response to a question from Chavez about disruption and internal innovation.
Nadella said Microsoft cofounder and former CEO Bill Gates had even encouraged him to rethink the server business.
It's important for a business to be able to recognize and move in response to the emergence of a new business model, Nadella said.
"In our case, we did," he said. "I mean, I wish we had started even earlier ... like always. ... Even if you don't disrupt yourself, you've got to be great at responding to these shifts in business models."
Also in the interview, Chavez asked Nadella who he most looks up to in the technology industry, other than Gates and Nadella's direct predecessor, Steve Ballmer. Again, Nadella referred to Amazon.
"I would say clearly what Jeff Bezos has done at Amazon ... is probably one of the amazing stories of the recent past," Nadella said. "But I'm a great admirer of anyone who creates new categories but are not overnight successes -- but who have gone through this period of 10, 15 years where people are saying, 'What is this business all about?' but have been able to turn and sort of say, 'Well, this is something that is an enduring hit.'"