Senior Microsoft executive Satya Nadella talked about cloud computing today in his first public appearance since he was named president of the Server and Tools business.

Nadella replaced Bob Muglia, a Microsoft veteran who is stepping down and leaving the company because Chief Executive Steve Ballmer wanted a change. At 43, Nadella is the youngest manager at his executive level, which reports directly to Ballmer.

Server and Tools makes Windows Server software, virtualization software and a cloud platform called Azure.

Nadella spoke at a hosted Q&A session at GigaOm's Structure cloud-computing conference. In cloud computing, businesses and users store their data and software on remote servers, then access them via the Internet. Microsoft also offers hybrid options that run software both on Microsoft servers and the customer's servers.

Microsoft sells cloud services such as email, collaboration and Office Web Apps. In addition, its Windows Azure is a cloud platform on which developers can build software. The company also recently started offering an Azure appliance, a "cloud in a box" placed at a customer's office, but which Microsoft maintains remotely.

Asked what programs companies feel comfortable migrating to the cloud, Nadella said, "There are things like a stateless website they’re very happy to put on the cloud today. But if you take their core billing system, is that something they want to take to public cloud? Probably not. They probably want to take to the private cloud."

When asked about security concerns, Nadella said companies have similar concerns about attackers penetrating their private network. "It’s really about the soft core vs. the hard shell, which is wherever you are," he said. "I think security will remain a big topic for the industry at large but it’s not just primarily a cloud issue. It’s an issue for anyone today who has any kind of network."

Nadella says Microsoft's new cloud products mean more revenue for the company, even though it may displace sales of traditional software. "It’s just going to increase consumption. The limiter is the current architecture approach," he said.

Here is what Nadella did not talk about: the outage that hit Microsoft's cloud email service BPOS this morning. (BPOS stands for Business Productivity Online Services.) The outage lasted several hours.

Nadella also did not update the number of developers and companies building new programs to run on Azure. "Today we have tens of thousands of customers who are playing with Azure," he said. "There’s a lot more [people] testing and developing." It sounds like the tens of thousands of customers may or may not be paying for Azure if they're just playing with it.