Microsoft chief's vision for a 'mixed reality' future starts with Qantas

The Sydney Morning Herald Finance 3 weeks ago

Microsoft chief executive Satya Nadella – who has just been crowned Fortune's business person of the year– has offered a Sydney audience a glimpse of the future.

The tech chief didn't need to look any further than the local training facilities at Qantas and its use of what he refers to as "mixed reality".

"If you can mix what is virtual and what is real then that is the ultimate experience. You don’t have to reach into your pocket for a device or anything, it is just there," Mr Nadella told a Sydney business audience at The Australian Financial Review's Chanticleer lunch on Wednesday.

In the case of Qantas, it involves using Microsoft's HoloLens technology to ensure the airline's engineers know their way around the flight deck for maintenance purposes, which avoids the hours of training traditionally spent on valuable flight simulators.

Microsoft boss Satya Nadella at The Australian Financial Review's Chanticleer Lunch on Wednesday.

“Qantas using HoloLens simulator for their training, that’s sort of a very early glimpse of what the future will look like, where you’re not mediated by a device" said Mr Nadella.

"To me that is the type of work that I see happening.”

Mr Nadella sees this practice of using commodity technology from companies like Microsoft, and developing proprietary applications on top of it, as the way of the future for all businesses.

“My view of the world is as follows: if every company is going to be a software company, what they need then is more software capability," he said.

"Whether you’re in mining, whether you’re in energy, whether you’re in banking it doesn’t matter, you will all want to build your own software capability."

He also sees big things happening at the "edge of the cloud", a reference to the trend of computing where computing services are available over the internet.

He referred to another Australian company, Willow, which is creating "digital twins" of the real world by installing digital sensors in industrial settings. This includes railway lines in Australia.

"All of that data is being collected in real time in a digital twin and then is being used to make it more efficient," he said.

It is Microsoft's embrace of the cloud, including the with the US Department of Defence, that has seen the valuation of the software group soar above the $US1 trillion mark in recent weeks and rejoin the pantheon of top tech stocks.

Not that Mr Nadella sees Microsoft as being in the same mould as some of the other tech giants.

“Most people conflate big tech as one thing. There are actually two very different business models at play, and I think it’s very important for people to recognise that … there’s a platform business model and there’s an aggregator business model," he said.

Mr Nadella describes Microsoft as a platform operator where it can succeed only if there is a lot of value being created around it.

While not naming his fellow tech giants, Nadella described aggregators as classic middlemen who are "taxing one side or the other side", in contrast to Microsoft, which succeeds only if its customers do.

It is a view that fits with what he sees as the future of international trade in a world that is increasingly viewed through the prism of President Trump and the US-China trade war rather than the Washington Consensus.

"Everyone wants fair trade, but I think the broader lesson for us as business leaders is that the next phase of globalisation better account for equitable local growth as being a necessary condition for a more globalised world,” he said.

"Unless I can talk to the local surplus that has been created because of our participation in Australia, I feel like, as a multinational company, I won’t have a licence to operate. That is what I think is being asked.”

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