There's been a move to where almost everything can be delivered as a service. Parker says Uber car booking is an example of transport as a service, Airbnb is where accommodation is delivered as a service and Microsoft's Windows Azure cloud platform is computing delivered as a service. He says this shift is closely aligned to reinventing productivity.
At the same time there's an economic effect driving down the price of hardware. Parker says when smart watches first appeared the typical price was around $300. Now you can buy them for $150. Hardware prices are falling so quickly, that physical devices are moving into the background: "And this all means a massive increase in the amount of data people use. In turn we are bombarded with more and more information competing for our attention. There's a danger that if we don't find ways of focusing, we'll switch off and lose the benefits."
So when Microsoft talks about reinventing productivity, the idea is to funnel the tide of devices, data and services invading our lives down useful channels.
Parker gives personal healthcare as an example. Microsoft now makes and sells the Fitness Band, a wearable device that fits on the wrist. It monitors such things as heart rate, sleep, activity and exercise. Parker says he has been able to transform his own health thanks to having "my data of me".
He says having a better idea of one's own health saves money, helps people stay out of hospital and in extreme cases can provide early warnings to change habits in order to ward off conditions like diabetes.
The Fitness Band is an example of how a tidal wave of data can be channelled to make it useful. Parker says the key to understanding how it works is to recognise: "The Fitness Band isn't an end-point, it's a platform. Others can build on it."
This fits squarely in Microsoft's approach to the market, which addresses three distinct audiences: end users, developers and IT professionals. "Our intention is to harmonise the needs of all three audiences".
Historically Microsoft had a distinctly confrontational internal culture where groups, teams and divisions would face off in a Darwinian battle for resources and attention. That worked as the business climbed to the top of the information technology industry during the 20th century. It's no longer the right culture for 2015.
CEO Nadalla has moved to align units to work together towards common goals. Parker says this cultural change has been a challenging period for the company; it means people have to think differently.
Another cultural change at Microsoft is recognition of the blurring between personal life and work life. That's how most people live today, but it wasn't how Microsoft addressed the market. It had clear lines drawn between the parts of the business addressing consumer or individual needs and those divisions targeting business and enterprise customers. Parker says these are now breaking down and Microsoft increasingly offers products and services that address both consumer and enterprise needs.
Microsoft's New Zealand customers are more in tune with Nadella's vision than some overseas counterparts. Parker says New Zealand has the highest proportion of people who have moved to Office 365 -- Microsoft's repackaging of it's mainstream applications as an annual subscription. He says we've embraced the terabyte of online storage that comes as part of the subscription and the Skype calling minutes that allow users to make device to traditional phone calls each month for no extra charge.
"We've seen a shift in the way individual people are buying this as a service. The same thing is happening in business. Our OneDrive for Business is essentially the same service. Microsoft has successfully moved from mainly selling physical boxes of products to selling services."
These changes have altered the way Microsoft earns revenue. Many services are now given away free to individuals. You can run basic versions of Office apps on an Android or Apple device for free. There are free versions of Office apps that work in web-browsers. Consumers who pay NZ$165 for an annual subscription get access to more features along with storage and phone calls. They can install the Office software on up to five computers and all their handheld devices for no extra charge.
As a result Microsoft has shifted away from earning money from individual consumers; businesses and cloud customers are now the dominant source of revenue.
Nothing illustrates the changes more than its position in cloud computing. It's no accident Satya Nadella ran Microsoft's cloud business before he rose to the CEO role. His understanding of how cloud computing changes the face of the technology industry is the context for the changes he has put in place.
Parker says there's still a land-grab going on in cloud computing. Today Microsoft is one of the top three cloud providers, along with Amazon and Google. The three have invested billions in the technology - that level of spending is required to build cloud services at the scale required to replace much of the world's existing computing infrastructure.
As an illustration of the power of cloud computing, Parker points to Vmob. It's a New Zealand-based business providing personalised mobile phone marketing around the world.
Parker says Vmob uses Microsoft's Azure cloud to service half a billion customers. Without cloud computing that would require a massive investment in infrastructure - more than a relatively young business could ever hope to finance. With Azure Vmob can buy just the resources it needs as and when they are required.
The results of these changes are already showing in Microsoft's financial position.
In 2014 turned in quarterly revenue reports that beat analyst expectations, mainly thanks to rapid growth in cloud computing sales.
