The team formed to manage Microsoft’s biggest moonshots has just released its first growth strategy, according to internal documents viewed by Insider. The plan shows the group’s desire to change Microsoft’s image “from being viewed as a productivity provider to a strategic cloud and mission-driven innovation provider” and how it plans to expand its government and communications businesses to fund innovative projects in the future .
Microsoft created an organization last year to house the company’s moonshots — the companies that represent what could be the next big thing for the tech titan. Named Strategic Missions and Technologies (SMT) and led by former Azure CEO Jason Zander, it brings together cutting-edge initiatives including quantum computing and space travel alongside its state cloud business.
In an email to the SMT organization last week, Zander shared what he called the “first SMT growth strategy” and described the entity as “the hub for scaling innovation and new business for Microsoft.” Included in the strategy is the group’s mission statement: “Our mission is to transform telecommunications and computers as we know them through technological innovation and scientific discovery, with the US federal government as our flagship customer.”
The organization comprises five companies: Microsoft Federal, which provides services to the US federal government, quantum computing unit Azure Quantum, its communications services for carriers (including Azure Operators Industry for telecoms 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-endless possibilities of commercial quantum computing,” Microsoft plans to prioritize investments that will drive business growth in the current fiscal year, according to the documents.
The organization’s primary goal will be to grow its core businesses, Microsoft Federal and Communications, to “maintain a strong revenue base that can be reinvested in technology innovations that teams can then introduce and scale into new products and businesses in future periods,” , the documents say.
Microsoft expects the company’s total addressable market to reach $105 billion for Microsoft Federal and $149 billion for its Microsoft Communications unit in fiscal 2025. The company is aiming to double its sales to date with an expected growth rate of 16%, 39% and 27% over the next three years, the document shows.
The documents said the company expects the Microsoft Federal business to be the biggest driver of growth in the company’s current fiscal year, and that it will increase Azure-credited cloud application and infrastructure revenue by 71% and increase revenue from its employee productivity software Modern Workplace by 23%. . Microsoft expects its communications business to grow 12.8%, the documents show.
To grow federal business, Microsoft already has 90% market penetration for Modern Workplace — its class of business applications that includes the ubiquitous Microsoft Office 365 productivity suite — according to the documents, and instead wants to focus on growing “high-value cloud workloads driven by Data is driven” and secure clouds for government. Microsoft notably won a Pentagon cloud contract worth up to $10 billion, but the agency eventually canceled the contract after a protracted legal challenge by Amazon.
“To enable this transition, our ability to become thought leaders is essential to shift market perceptions of Microsoft from being viewed as a productivity provider to a provider of strategic cloud and mission-centric innovation, and to leverage our strong reputation within the company.” it in the document.
The documents also provide insight into how Microsoft communicates each unit’s mission statement to employees and the responsible managers:
- Microsoft Federal, led by Corporate Vice President Rick Wagner: “Microsoft Federal is changing the way the federal government innovates by using technology to do its most demanding jobs.”
- Azure Quantum led by CVP Zulfi Alam: “The Azure Quantum team is developing the quantum machine to find solutions for a better future.”
- Communications: Azure for Operators Industry, led by CVP Yousef Khalidi, “Equips telecom enterprises and governments with a ubiquitous hybrid cloud platform delivered over a secure programmable network.” Azure for Operators, led by CVP Martin Lund “Accelerates the cloud transformation of mission-critical communications networks for core and edge services.”
- Mission Engineering led by Zach Kramer: “Mission Engineering delivers the innovation and technology that creates the ecosystem that transforms mission.”
- Growth Innovation and Strategy, led by CVP and COO Mitra Azizirad: “GIS accelerates innovation and business performance for SMT, which will drive 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 insights to share? Contact the reporter via the encrypted messaging app Signal (+1-425-344-8242) or email (email@example.com).