The team formed to manage Microsoft’s biggest moonshots just released its first growth strategy, according to internal documents viewed by Insider. The plan reveals the group’s desire to change Microsoft’s image “from being viewed as a productivity vendor to a strategic cloud and mission-driven innovation provider” and how it plans to grow its federal government and communications businesses to fund innovative projects in the future.
Microsoft last year created an organization to house the company’s moonshots — those businesses that represent what could be the next big thing for the tech titan. Called Strategic Missions and Technologies (SMT) and led by former Azure boss Jason Zander, it brings together cutting-edge initiatives including quantum computing and space alongside its government cloud business.
In an email to the SMT organization last week, Zander shared what he called the “first SMT Growth Strategy,” describing the unit as “the nexus for scaling innovation and new businesses for Microsoft.” Included in the strategy is the group’s mission statement: “Our mission is to transform telecommunications and computing as we know it, through technological innovation and scientific discovery with the US Federal Government Mission as our lighthouse customer.”
The organization includes five businesses: Microsoft Federal, which provides services to the American federal government, quantum computing unit Azure Quantum, its communications services for network operators (including Azure Operators Industry for telecommunications and Azure for Operators edge services), mission engineering, and growth and innovation strategy.
Despite lofty long-term goals such as “harnessing the laws of physics to enable the near infinite possibilities of commercial quantum computing,” Microsoft plans to prioritize investments that will result in business growth for the current fiscal year, according to the documents.
The organization’s main objective will be to grow its core businesses, Microsoft Federal and Communications, to “maintain a strong revenue foundation that can be re-invested into technological innovation, that teams can then incubate and scale into new products and businesses in future periods, “the documents state.
Microsoft expects the total addressable market through the company’s 2025 fiscal year for Microsoft Federal to reach $105 billion, and $149 billion for the Microsoft Communications unit. The company aims to double the revenue generated by then, with an expected growth rate of 16%, 39%, and 27% over the next three years, the document shows.
The documents state that the company expects the Microsoft Federal business to be its biggest driver of growth in the company’s current fiscal year and has increased Azure credited revenue for cloud applications and infrastructure by 71% and revenue from its employee productivity software Modern Workplace by 23%. . Microsoft expects its Communications business to grow 12.8%, the documents show.
To grow the federal business, the documents state Microsoft already has 90% market penetration for Modern Workplace — its class of business applications that includes the ubiquitous Microsoft Office 365 productivity suite — and wants to focus instead on growing “high value cloud workloads fueled by data “and secure clouds for government. Microsoft notably won a Pentagon cloud contract worth as much as $10 billion, but the agency ultimately canceled the contract after a lengthy legal challenge from Amazon.
“Imperative to enabling this transition is our ability to drive thought leadership to shift market perceptions for Microsoft from being viewed as a productivity vendor to a strategic cloud and mission-driven innovation provider, leveraging our strong reputation within the enterprise,” the document states.
The documents also shed some light on how Microsoft is communicating the mission statement of each unit to employees, along with the leaders in charge:
- Microsoft Federal, led by Corporate Vice President Rick Wagner: “Microsoft Federal is changing how the Federal government innovates by bringing technology to bear on its most challenging missions.”
- Azure Quantum, led by CVP Zulfi Alam: “Azure Quantum team is engineering the quantum machine to solve for a better future.”
- Communications: Azure for Operators Industry, led by CVP Yousef Khalidi, “is empowering the telecommunications industry enterprises and governments with a ubiquitous hybrid cloud platform delivered over a secure programmable network.” Azure for Operators, led by CVP Martin Lund “is accelerating the Cloud transformation of mission critical communication networks for Core and Edge services.”
- Mission Engineering, led by Zach Kramer: “Mission engineering is delivering the innovation and technology that creates the ecosystem that transforms mission.”
- Growth Innovation and Strategy, led by CVP and COO Mitra Azizirad: “GIS is accelerating innovation and business performance for SMT that will fuel revenue growth and strategic investments today and for the next decade.”
Ashley Stewart is a senior tech correspondent at Insider. Are you a Microsoft employee or do you have insight to share? Contact the reporter via the encrypted messaging app Signal (+1-425-344-8242) or email ([email protected]).