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The Cloud of Tomorrow

Episode 785 08.23.22

Nick McQuire, director, strategic missions and technologies, Microsoft joins Peggy to talk about the future of the cloud, sharing the four key areas that are collectively shaping the future of cloud. He also shares the three key technology shifts that are core to both today’s innovations and tomorrow’s disruptions, and stresses how co-innovation will play a role in making future cloud technologies available to all.

Below is an excerpt from the interview. To listen to the conversation from The Peggy Smedley Show, click here or go to to access the entire show.

Peggy Smedley: Nick, I’m excited to have you back to talk about your new role at Microsoft. So, really tell us what’s going on.

Nick McQuire: Yeah, lots going on. It’s so exciting to be able to share a little bit with you and your listeners. I work in Microsoft’s Strategic Missions and Technologies division or SMT, as we refer to it, in the acronym sense. This is our business incubation and scale-up arm at Microsoft. SMT was set up, I believe in November of last year, really as the nexus and connection point between our long-term research in Microsoft Research on one hand and our current solution portfolio on the other. Our role really is to bridge that gap between the products in market and our long-term research, but ultimately to help build, accelerate, and scale what we believe are the next generation of $10 billion-plus businesses for Microsoft. So, there’s no pressure, no pressure on us. At the moment, we’re focused on four key areas that are collectively shaping the future of the cloud. The topic that we’re discussing today, which I’m excited about, telecommunications and 5G, space, quantum computing, and solutions for federal government. So, it’s a really exciting place. It’s a really exciting area. Lots going on. Lots to talk about.

Smedley: Oh, I love the idea though, $10 billion. I’m glad I’m not you. A little pressure there, but I love that you’re talking about this. How would you describe… I guess when I think about what you’re talking about, the future of the cloud, because we think about that. I think everybody gets overwhelmed. What are these key elements that you’re talking about?

McQuire: Yeah, it’s a really good point. I think there is a lot of discussion about the cloud out there. In fact, I think that there’s little discussion about its direction and importantly, what that means for businesses. I think that’s really what we’re trying to do more of—to ground it a little bit for you, Satya Nadella, our CEO, talks a lot about today’s innovations, how they’re enabled by this intelligent cloud and intelligent edge. They really focus on three major technology shifts at the moment, ubiquitous computing and the edge, the advancement of AI, and immersive experiences, through things like mixed reality. So, it’s these three pillars that we see as being core to today’s innovations, but also what we’re going to see in terms of tomorrow’s disruptions, which are going to shape the future of cloud, the evolution of these three shifts significantly. For example, we’re going to see ubiquitous computing be expanded even further than we’ve seen today, by new technologies like 5G, the advancement of space and satellite communications, for example. So, this is going to bring compute increasingly in an expanded capacity to out-of-reach areas, that we have not yet seen before. Ultimately, what we think is, this is going to create a new model for app development and for developers, but that’s just one piece of the puzzle. We also see a second area, where AI is going to be advanced by AI and Quantum at Scale. This is going to help drive much more efficiency and a precision into some of the problem solving that currently, classical computers today, they just can’t match it. I think and underpinned by this, we have this third area, where we’re going to see this new paradigm of co-reasoning develop between humans and machines. That’s going to evolve these kinds of immersive experiences that we see today, through things like mixed reality. So, it’s these three areas, 5G in space, AI and Quantum at scale, human/machine experiences, along with ultimately, our responsible approaches to each area, that we think are really shaping this future of cloud. I think one last thing I’ll say on it before I pause, I think this isn’t just about technology simply for technology’s sake. The reality is, and for us, it’s about humans as well and making this possible. We think this is also about co-innovation, where we partner and help everyone as much as possible, access and benefit from these disruptions that are coming down the line. So, we want to help businesses get ready for them today, which is why we’re talking about it.

Smedley: I like that you talk about, it’s not just tech for tech’s sake, because I think it’s enabling so many things to think differently. I think it’s important there. When we talk about the cloud, how it’s different from what it is today? I think everybody has to think about it differently. Are those all the things that you just unpacked, in saying, we have to think about the cloud and the edge and all of these pieces differently, is that what you’re really sharing with us? Because then I think about what the future’s going to be. Is that where we’re heading right now? Are those the points that you’re really addressing?

McQuire: Absolutely. I think there’s a couple of key things that stand out for how this kind of future of cloud will be different from what we’re seeing today. Some of these points, I’ve briefly highlighted. On one hand, we’re going to see this cloud increasingly be connected and distributed in new areas, that we haven’t seen. On the other hand, we’re also going to see it built and scaled for huge amounts of speed and precision, that we haven’t been able to see. So, it’s this continuum that’s going to be greatly enhanced when it comes to connectivity and computing. That’s just something we haven’t really yet seen. I think the second thing, that’s perhaps even more significant… and this is what you’re alluding to there, Peggy, is that it’s going to increasingly incorporate the intersection or the integration of some of these advanced technologies that we don’t fully yet associate with the cloud of today. We include things like cellular and 5G, satellite, advanced AI at Scale. These are all, I think, good illustrations of how we’re going to see the cloud evolve that’s a little bit different. I think an example of this coming to life, is some of the work we’re doing currently in 5G. But I’ll stop there, because I think you probably, no doubt, have a few questions around 5G in particular.

Smedley: That’s what I was going to get to. When you think about 5G, I think, is 5G going to enable the future of the cloud in a big way? Because we talk about this. Everybody’s been saying 5G is positive, then negative. Everybody gets afraid of it. What’s your view of that?

McQuire: Yeah. It’s a really important discussion. I think the frame of bringing 5G as a component of the future of cloud is really a new discussion point. I think that’s largely because 5G, in the past, has been thought of as primarily a network upgrade, but we see it as a lot more than that. It really is a new model for the cloud, especially for developers and in particular, those developers that are looking to run AI applications at the edge, but in previously hard to reach areas. So, think outdoor, wide area environments. Think deep underground. Think rural environments, which don’t have fiber connectivity. There’s more, but I think 5G will give developers a little bit more power to solve problems in these areas. It’s also going to give them a little bit more control over these AI-powered experiences that many are now looking to create because they can really, for the first time, use the software-defined capabilities in 5G technology to communicate and interact with the network through APIs, in order to build these experiences, particularly in a distributed capacity. A good example of this is some of the work we’ve been doing with Ferrovial, the Spanish multinational infrastructure company. We announced this work earlier this year, at BUILD. It fixtured into Satya’s keynote at BUILD. It’s a great example of this future cloud in action here. Ferrovial is building what it calls smart highways of the future, which are based on 5G. They involve a number of these integrated technologies, IoT and sensors, edge computing, AI, digital twin and simulation, just to name a few. They’re using these 5G networks to turn stretches of the highway into an API, in order to improve safety, which is really the prime driver. But also, it better communicates to a mix of what they see as an increasing mix of autonomous and semi-autonomous vehicles, that are going to be populating our roads in the future. So how they’re doing it is, well, they’re building this connected infrastructure. That’s going to enable highways to automatically adjust in realtime, to changing situations on the roads, thanks to these IoT-based cameras and sensors that they’ve got placed along the highway. These sensors are going to ultimately enable them to create a digital twin, which will help them to train some advanced AI models to do really clever things, like object detection for debris or broken-down vehicles on the roads, which will allow for the digital signage to be updated and inform drivers in realtime of these safety hazards that are ahead. I’m just scratching the surface on what their plans are for this technology, but the work they’re doing, in our view, is such a good example of this future cloud in action. It’s expanding, enabling these intersecting technologies to solve problems that historically, they’ve just not been able to do. Literally, this is putting intelligence at the roadside to solve safety problems, which is a brand-new thing for them and a great example of how 5G is playing a role in this cloud of the future.

Smedley: Nick, I just heard you say some really key points that I want to repeat again for anybody who’s listening. You talked about infrastructure, safety, sensors. These are all things that I think businesses and enterprise companies can say, this is what they have to think about, especially when we talk about our country and what we have to do when we think about a global approach to this. I think, when we talk about ubiquitous connectivity ultimately impacting things, we’re thinking bigger. We’re thinking beyond what we can do today, but what we need to do. You just said, look, this is what one company’s doing. Many companies can do the same. So, we’re taking this whole idea of leveraging digital twin, to this approach that I think is really cool. Are you seeing this? That more businesses are going to be able to do this and go beyond just what one company did, many companies can do? And we’re improving our lives by doing it.

McQuire: Absolutely. I think the challenge has been just trying to educate and inform businesses across many industries as to what’s possible. I think, as I’ve said earlier, we’re only scratching the surface because not only is it going to help create these new scenarios, for example, what Ferrovial is tackling, but many we haven’t yet seen. These scenarios can be growth and new business model related. They can be optimization related, to improve bottom line and productivity. I think, ultimately what we’re talking about is this ubiquitous connectivity over time, really helping more and more business become agile and resilient, which I think is going to be really, really important as we look ahead. Ferrovial just didn’t have the capacity previously to put compute at the roadside, to help them solve safety problems. They’re also looking at, actually incidentally, finding new ways to monetize this data, in terms of new business models for them. They just couldn’t do this previously. They just didn’t have that capacity. Then, when you look at some of these other industries and there’s many, many industries and different companies exploring what’s possible here—oil and gas, mining and energy, for example, the ability to connect devices hundreds of feet below the surface of the earth to improve their monitoring and operations. That just hasn’t been there before. Of course, agriculture, to remotely monitor crop yields, to improve their environmental impact of new solutions coming into agriculture. All this is really starting to happen now. These are the new doors of opportunity around ubiquitous connectivity. But as I said earlier, we’re just beginning here. This is why we’re working hard at Microsoft to build more of the tooling in these areas for developers, to really expand what’s possible with this technology. So, we’re just getting started.

Smedley: It’s exciting to hear you talk about, Nick, is you’re saying these developers can come up with AI apps. They can think of the future about tech, not just for tech’s sake, but to develop new ways of developing or creating greater ROI. Looking to the future saying, we’ve got to think bigger about how to improve the bottomline. I think when you advance all of this, you’re saying, look, there’s so much more companies need to think about. Is that the bigger picture of this? Not just for today, but two years now, five years now, the bigger picture is what you’re saying, you’re just starting to see all that.

McQuire: Absolutely. We’ll possibly touch on this in a minute, but I think there’s a perception that these advanced technologies can be difficult. And particularly the integration of a number of these technologies, which is really what we’re saying is a hallmark of this future of cloud. I think Ferrovial is bringing that to life really well. But there are possibilities to get moving with this technology today and there are opportunities. I think it’s some of these advanced scenarios that I think are showing the direction, that I think more and more companies, once they become informed and they become more aware, can really start to explore with us in a co-innovation capacity, how some of these advanced technologies can be applied to their business. That’s really why we’re talking about it.

Smedley: We’ve talked about 5G. We’ve talked about the cloud. One of the things you also mentioned was AI, Quantum at Scale. So how will artificial intelligence advance AI and Quantum at Scale? I’m kind of curious. You can go into that. How will this help organizations then solve problems? Because that seems really exciting, to hear you talk about that.

McQuire: Yeah. We’ve talked about ubiquitous computing and edge connectivity. The second major area around how we see the evolution of cloud, is really around the disruption we’re going to see around AI. Now, I remember very well, the fantastic time I had on this program last time with you, Peggy, where we talked earlier this year, about this increasing degree of maturity that we’re seeing around AI now. We think over the next three to five years, we’re going to see this evolution of AI, from largely being this kind of task-driven tool of today, that’s gaining more and more ground with businesses, to one that is evolved into becoming much more multitask and multi-domain oriented. But more importantly, we’re going to see it much more scalable as well. This is particularly in the sense of the arrival of these large-scale AI models and super computing resources that we’re seeing today at more and more in depth. They’re being made much more available for businesses, as a platform, to access and to build on for their own unique needs within industries and within their organization. That is a big change we’re going to see. We’re going to see it much more generalized, but also available as a platform for businesses. I think a good way to look at how those changes will translate to solving problems for customers is really through our Horizon approach to our AI at Scale family. For those of you that are less familiar with what we refer to as AI at Scale, AI at Scale is our family of large-scale transformer, natural language AI models, as well as super computing resources that are available in Microsoft Research, at this current moment in time. These include our Turing models, GPT-3, which we’ve announced in partnership with OpenAI, as well as earlier this year, our recently announced Megatron, a 530 billion parameter model that is announced in partnership with Nvidia.

What we do is we apply the Horizon approach or the Horizon framework to how we see these capabilities manifest for our customers. Breaking down the Horizon approach to you, for those of you that are familiar, we see Horizon 1 is very much about near term improvements to our existing portfolio. I think year two out, type of thing, Horizon 2 tends to be about a two-to-three-year evolutionary period, but ultimately an evolutionary change to our existing business, such as a new business model attached to one of our technology areas. Then third, we have a third Horizon, Horizon 3, which tends to be about moonshots. Longer term, possibly year five plus, game-changing areas that have the potential to open up entirely new categories and markets for our customers.

So, we see the way in which these models and this advanced AI will solve problems, will really reflect off this Horizon approach. So, in a Horizon 1 sense, we’re making these models increasingly accessible in our existing products as new features, from Bing to Office, Power Platform, GitHub. They’re already solving problems for customers in areas like information search or even code generation for app development, for example. So that’s very near term. That’s very here and now, in terms of our existing business. When we move a little bit further out, we’re also starting to see this new AI capability set becoming available as platforms, in their own right, as a Horizon 2 model. A good example here is Novartis. Novartis is using our AI at Scale family, ultimately as a business platform, to speed up R&D in their drug discovery division. This is ultimately aimed at improving document search and summarization. Thanks really, to the information explosion that they’ve seen in medical knowledge over the past five years, they just physically can’t keep up, so they’re using AI for that. So that’s how we see it manifesting, in terms of solving problems in a Horizon 2 sense. When we look further out, in a Horizon 3 model, maybe several years from now, I think we’re going to start to see AI at Scale facilitate a new paradigm of computing in this Horizon 3 sense, particularly as we look to combine AI super computing resources with scalable quantum computing, in the future. This is what we refer to as AI and Quantum at Scale.

As part of our path to building a scalable quantum computing system for businesses, we think this combination is going to generate efficiency and precision gains, really that we’ve just not been able to achieve with classical computers. This will be positioned, largely in some really tough areas and solving for some tough problems. Think computational chemistry, materials discovery, molecular dynamics, for example. In that scientific domain is really where we’ll see this new paradigm of Horizon 3 computing, where we’ll see the combination of AI and quantum come together. So, it’s this transition from AI to Quantum at Scale, from AI as we see it today, it’s going to take a number of years, but this is going to be what we see as a critical aspect of the future of cloud. It’s really through that Horizon approach, is how we’re going to see it realized and how it’ll address both near-term and longer-term problems for our customers.

Smedley: I love hearing you talk about this, Nick, because I think anybody who’s thinking about where they take their business, Horizon 1, 2 or 3 and they think about where they can go… Computational chemistry? Not me, I’m a journalist. Not going there, but I get the idea of what you’re doing. I think it’s really exciting to think about where our businesses can go. I think that leads me to want to ask you this next question. I was listening to you talk, and I was thinking about Horizon 2 and thinking about, how do we solve new problems? I was thinking about immersive experiences. I was thinking in my mind, how you could take and teach the next generation, where humans and machines interact. I was thinking all about that, about how now, the co-reasoning paradigm, this whole idea of where we will go, it led me to think about that. I don’t know if that’s what you’re thinking, but that’s what I would love for you to talk a little bit about because this led me think, we’re kind of getting there now and where all of these could go, because I could see there’s so much that can be done there. I don’t know if that’s what you’re thinking, but talk to me a little bit about that, because that’s where I could think, there’s just so much that could be done and so much that Microsoft is doing now.

McQuire: Yeah. I’m so pleased you asked about this. This third area, I think is perhaps the most fascinating development of how the cloud’s going to evolve in the future, because it involves much more the human aspects to computing, in terms of what we’re talking about here. Many of the technologies that we’ve been talking about, ubiquitous edge computing, connectivity, advanced AI, we’re going to see these combined in the future to help create, as you rightly point out, this new paradigm for human and machine interaction, which will increasingly involve the co-reasoning between humans and machines. I think an example that brings this to life for you… and I can break it down a little bit for you, is we are currently working with a major agricultural organization in a research capacity, to build augmented intelligence systems for firefighters. Now, sadly, I can’t name the company at the moment, the organization at the moment, but we’ll be able to do so soon.

As we know, wildfires are escalating all over the world. This organization wants to equip its firefighters at the front line, with realtime data intelligence and over time, autonomous systems to improve the safety and responses that they have, to the proliferation of wildfires that they’re seeing at this current moment in time. The solution for this outcome for the customer, involves a number of different things. It involves edge communications and computing. It involves fusing both geospatial data with on-the-ground insights, to train large-scale AI models that can predict outbreaks and importantly, be able to co-reason with the firefighters on the spot, to improve their decision making. That decision making can involve everything from how you plan for logistics to resource allocation, et cetera. So, it’s really important stuff. Now, what’s really interesting as well, is in the future, they will look to provide over private 5G networks, which are going to be backed up through a resilient satellite communications network, firefighters, with the ability to coordinate and deploy multiple fleets of firefighting robots, such as diggers and water spewers, to help keep the humans on the front line a little bit out of harm’s way and use some of these autonomous systems for some of the effort. Now, this scenario is so important on many levels, because of the challenges we currently face, obviously with wildfires all over the world. Here in the U.K., they’ve been significant. We know full well, how significant they are on the west coast and all over the U.S. But it’s also, in our view, a great illustration of the elements of this future cloud human/machine paradigm, operating in action.

It involves ubiquitous computing, advanced simulation, these large-scale models put to reason and put to action with domain experts, co-reasoning with the AI and ultimately into this world of autonomous systems, all working together to solve some really difficult problems, that we haven’t been able to achieve yet. I think as we look to the future, I think this type of scenario doesn’t involve machines reasoning on top of data. It involves the future, which is increasingly going to be about humans co-reasoning with machines. This is ultimately what we call augmented intelligence and intelligence working itself, which is I think another key aspect of the future of cloud. It’s a big change from, largely this information working model or information worker that we see today. I think that’s part of how we see this new paradigm evolving between humans and machines. It’s a fascinating area. It’s early, but we think this is going to be the direction of travel.

Smedley: I think what’s exciting, every time I hear you talk about this, is that the cloud enables us to do so many things faster, quicker, easier, that we just have to open up our imaginations. We have to let developers work with us. Let us work with those machines, interact, like you just described. It enables businesses to prepare for the future in so many ways. Do you see that? Is that what Microsoft wants, to enable businesses to work and understand what the future is all about?

McQuire: Absolutely. Part of how we’re helping businesses get prepared for these disruptions ahead is the reason we created the Strategic Missions and Technologies division last year, as part of this, which I mentioned previously. This is our incubation and scale-up arm. We’re actively incubating these technologies in SMT today. As we said earlier, I think as important as these technologies are, it’s humans that will make them happen. We recognize that gaining a foothold, where to start, can be hard for many customers. So, we’re also doing a number of key things as part of our mission within SMT. We’re obviously focused on bringing strategically, these technologies to customers as platforms, at the platform level. Whether that’s in 5G development, whether that’s in AI at Scale, which I talked about, whether it’s Quantum as a service, to help customers spend less time on researching and building the foundations in the areas and much more time around how to apply the technology, co-innovating with us, in terms of how they apply them to their business problems. We also share a lot of learnings. I’ve spoken previously about our AI Business School, one channel where we share these learnings. We also do a number of dedicated workshops with our customers throughout the year, where we run a number of sessions on these topics, which can help them get going. Then lastly, I mention this point. We really want to focus on a culture of co-innovation in partnership with our customers. We don’t have all the answers. We’re absolutely truthful about that and honest about that. So, partnering and co-innovation with enterprises on these future cloud disruptions, is absolutely critical to how we want to see this become enabled in the next number of years.

Smedley: As I hear you talk, you talk about wanting to apply these, wanting to do the research. You want to share learning, co-innovation. Those are some big points, some big takeaways we just have here. Any final recommendations or takeaways you want to give listeners? Because I think it’s important, they hear these amazing things we’ve talked about today. I think it opens up, the sky is the limit for what customers can do or what potential customers can do with you.

McQuire: Yeah. We are continuing to build out the learnings and the materials to help customers around a number of these topics and themes that we’ve covered today. I think, backing up from a recommendation’s perspective, I would doubly make the point that every organization can and should be able to access these future cloud technologies. So, this innovation isn’t just confined to the tech firms. We want this for everyone. Part of our approach is taking that platform approach to enable that. I think, secondly, we’re in a tough climate, without question, but we shouldn’t let that difficult economic climate slow you down in terms of innovating. I think the technology trends of the future, I think future technology, disruptive technology, I think takes on a heightened importance for businesses in this climate, as keys to resiliency, agility, and growth down the road. I think lastly, linked to that is, I think it’s important to really start to think and plan around these today. We have many learnings we can share, as I mentioned earlier, including our approach to innovation within Microsoft as well. I think that’s another very, very popular topic. We can obviously work with you, to share a number of those insights as part of it. So, feel free to get in touch with us, on any of these fronts.

Smedley: Nick, I love that you said there’s a heightened importance to resiliency, growth, and innovation. It just seems like, if customers and listeners take that away, their potential for growth and getting new employees to see that, I think is really great. Thank you, Nick McQuire, director of product management, Strategic Missions and Technology unit at Microsoft. Thank you for all your time today. Where can our listeners go to get more information about what we talked about, maybe working with you guys, having this great opportunity today?

McQuire: Awesome. Yeah. Thank you, Peggy, as well. I always love the conversation. Feel free to reach out to me on LinkedIn. I’m also available on Twitter. More importantly, we’ve got a number of content areas and blogs on these topics, available to you in the speaker notes. So, feel free to check those out. If you need anything further, do reach out. We’d be happy to hear from you.

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