"Harms wrote the white paper "Economics of the Cloud" in 2010 that helped force a cultural reckoning at Microsoft and pave the way for the company's cloud-computing success. "We need to rapidly rethink the new economics of AI across the company - just as we once did with the cloud," Nadella wrote this month in his message, a copy of which was obtained by Business Insider."
"AI companies are facing mounting questions over whether massive infrastructure investments will pay off. Microsoft took its foot off the AI spending peddle earlier this year, helping to stoke these concerns. However, in recent weeks, the company has doubled down again through huge new deals with OpenAI and Anthropic. The dynamics were similar in the early days of the cloud. Back then, big tech companies spent heavily to build data centers even though the payoff was uncertain."
Satya Nadella says Microsoft must completely rethink its business model for the AI era and appointed Rolf Harms as an adviser on AI economics. Harms authored the 2010 white paper "Economics of the Cloud," which helped trigger a cultural shift and enabled Microsoft’s cloud success. Nadella called for rapidly rethinking AI economics and building an AI factory along with a family of Copilots and agents to drive diffusion and usage across the full stack. Microsoft briefly pulled back on AI spending earlier in the year but recently renewed major investments through deals with OpenAI and Anthropic. The situation echoes early cloud-era infrastructure bets with uncertain payoffs.
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