Microsoft Microsoft CEO Satya Nadella talks to the troopsConsider the humble server, like you'll find in a server room or data center.
Right now, there's a big push from some of the biggest names in technology to move past it.
In particular, Amazon Web Services has built a big business around cloud computing, and Google is following close behind.
These companies rent out capacity in their own state-of-the-art data centers to anybody who wants it. Amazon's first customers were mostly smaller businesses and startups, who were happy to offload the cost of all that hardware and software and the people needed to run it. But in the last few years, big companies have started to turn to this model as well.
Microsoft is aggressively investing in its own cloud platform, Azure. But for Microsoft, the traditional server is its secret weapon - the one thing they can do that the competitors won't or can't.
Microsoft CEO Satya Nadella told Fortune Magazine, "We now have the ability to tie together the cloud and the server. That is a very unique capability that we have. So who am I competing with? Amazon has no capability to compete there. They don't have a server. Nor does Google. Oracle doesn't have the equivalent capability. So those are the places where we want to really excel."
This "both-and" model is sometimes called "hybrid cloud," and some recent moves show how it's the lynchpin of Nadella's cloud strategy.
Just recently, the company announced the Azure Stack, a feature in the next version of Windows Server that would let customers run the same kind of underlying platform in their data centers as Microsoft does in its own cloud. It was an aggressive move towards making it easy to write an application once that can be set up and run either in the Microsoft Azure cloud or on a local server farm.
In other words, Microsoft wants its grand investments in cloud to work in perfect harmony with its long-standing server software business.
"I don't think of my server business as somehow 'old school' or 'legacy.' I actually think of the server as the edge of my cloud," Nadella told Fortune.
Amazon and Google only have the big cloud part of that puzzle, Nadella says. Neither of them are primarily
At the same time, as Nadella points out, Oracle has the enterprise server acumen, but a much smaller and more limited set of cloud services. But it's worth noting that Oracle is making its own investments in this space, too.
IBM is also making a big bet on this hybrid cloud model, and is probably Microsoft's most formidable competitor in the space.
For those who want the proverbial whole enchilada - software, infrastructure, and services - Microsoft is willing to work with customers on their servers, in the cloud, on mobile devices, or wherever else, Nadella says.
And while he believes that "others can succeed as well, just like in the previous generation," Nadella believes that thinking of the server as part of the bigger picture is the right way forward.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.