Nadella: $5 billion a year is price to play in public cloud

Microsoft CEO Satya Nadella has revealed the sheer scale of the company's investment in public cloud, which he said was now a $4.5 billion business.

"I think that if you're not already spending a lot of capital in the order of four or five billion dollars each year to just grow your cloud, probably it's a little too late to enter the market," he said in an interview with CNBC's Jon Fortt.

It's a significant "entry barrier"in terms of capital expenditure, and one that few can achieve, added Nadella.

"I mean, if you're a network operator today, you have to be in that business, and if you're a mega-scale cloud provider you're already committing a lot of capital. In our case we've been committing it for multiple years and we're not alone. There are at least two other players like that, Amazon and Google in particular. But we are one of the three in that category."

Microsoft, AWS and Google have been in a fierce battle for market share in public cloud, signalled by ongoing price cuts.

The battle has put pressure on other providers, such as Rackspace, which has repositioned itself as a provider of premium services, as well as other tier-one vendors, with both VMware and IBM fighting for a foothold in the public cloud sector.

Azure is not the only part of Microsoft worth some serious coin – Nadella's salary package has also been revealed in filings with US regulators. The CEO's total compensation is worth $84.3 million this year, according to Reuters.