Starting a company in Australia, especially one that’s in the high tech industry, is much harder than it is in many other places in the world. This used to be due to a lack of supporting infrastructure, what with Australia’s remoteness precluding the required investment, however in more recent times that barrier has begun to melt away. The problem many startups face in Australia is that acquiring funding is extremely problematic as Australia’s risk averse investing style has meant that our large capital reserves aren’t used to invest in such ventures. Previous governments haven’t done much to change this, preferring to support already established businesses, however in his recent budget response Bill Shorten showed vision that few of his contemporaries have in the form of the Labor’s future technology policy.
At the core of this policy is the Smart Investment Fund, a $500 million allocation that will be used in partnership with venture capital firms and banks to facilitate more investment in early stage startups. I have spoken previously about how something of this nature would be required in order to kick start a Silicon Valley equivalent here in Australia and the policy that Bill Shorten has proposed lines up with that idea perfectly. Whilst startup investment can never be made risk free making them more attractive, through direct government investment and the partial loan guarantee with banks, will ensure that more of Australia’s capital makes its way into new businesses rather than the traditional investment vehicles.
Of course providing funding for such ideas is only one piece of the puzzle as we’ll need to encourage students to pursue careers in those industries. To this end Labor as put forward a policy to provide numerous scholarships to students who complete degrees in the fields of science, technology, engineering and mathematics (STEM) and then go on to become teachers in their fields. In addition to this Labor is proposing to forgive the HECS/HELP debts of almost 100,000 students studying in this field, something which could provide an incredible leg up for fresh graduates starting their career. Considering that 75% of the fastest growing new jobs are within these fields encouraging students to take up careers is an incredibly smart move and one that the current government should look at adopting.
You might be surprised to hear this but I’m on the fence about coding being added to the national curriculum, mostly because I’m not sure how it’d end up being implemented at the school level. Starting out in coding isn’t the most exciting of adventures and the rote learning approach which many schools use would, I feel, end up with them becoming bored and frustrated rather than energized and intrigued. Of course I’m not a teacher and I’m sure there are many who are more experienced in this field who could design programs that tackled this issue properly. In the end this is something that I’d have to see in action before I could form a solid opinion on it as whilst I’m all for kids being aware of how technology works I also know how quickly they can become bored with such things.
This is what the Australian public needs to see from a party in opposition: clear concise policies that show a valid course of action rather than mud slinging and point wining which have plagued Australian politics for the last 3 terms of government. Whilst these policies might not ever see the light of day it’s good to see that the Labor party is thinking along this direction and hopefully such policies will fuel their campaign come next election. I can only hope that the Liberals take note as whilst any incumbent would loathe to agree with their opposition it’s hard to deny just how solid some of these ideas are.
After many years and hundreds of thousands of illegitimate users being on their service Netflix has finally arrived in Australia, much to the delight of Australian’s everywhere. In the short time it’s been available Netflix has already managed to account for 15% of all of iiNet’s traffic a sure sign that many people have wanted their service for some time. However, as expected, the content catalogue is a small subset of what’s available overseas leading many to keep their VPNs and over circumventions in order to get access to the same content people overseas get. On the surface that would appear to be a big issue for Netflix, given the pressure they’ve been under in the past to shut down dirty VPN users, however the CEO of Netflix (Reed Hastings) has revealed that they’re a small issue and his focus is squarely on converting long term pirates to legitimate customers.
In the interview (which is well worth a read in its entirety) Hastings says that VPN users are “a small little asterisk compared to piracy”, and further goes on to say that they’re users who are willing to pay for content but can’t for some reason. The solution to that problem he says for Netflix to “get global” and remove the incentive to use a VPN with their service. Essentially this would boil down to making the whole catalogue available to all users of their service, regardless of their location around the world. Whilst this idea is highly commendable, and demonstrates Hasting’s understanding of how media consumption has changed in the digital age, it’s ultimately doomed to failure given the challenge that they’re up against.
Netflix’s main issue with their catalogue isn’t the ability to deliver it, that’s been a solved issue for them ever since they switched from mailing DVDs to streaming services, it’s always been securing the rights deals to distribute content in certain areas. This is why their current catalogue in Australia is so paltry when compared to the one in the USA as Netflix, lacking a presence in Australia for so long, has been usurped by other distribution partners like Fox. Indeed Netflix even sold the rights to distribution for their flagship series House of Cards to Fox (through Sony) for the first two seasons, although that seems to have been time limited to coincide with their Australian launch.
Therein lies the rub; Netflix’s catalogue can only grow as fast as it can secure rights to distribute content in the countries that it has a presence in. In order to make their catalogue truly global they’d have to secure rights for every show in every region, something I’m sure they’re attempting to do but will run up against the rights holder empires that have cemented themselves in an old-world business model. They could, in theory, make global licensing rights a condition of any show being on their service however most popular shows are either backed by big production houses with distribution rights already in place or the fee required to do so would be so high that Netflix would be unlikely to sign up for it.
Netflix does have the advantage of being the biggest single provider of content across the globe, giving them a little clout in negotiating these content deals, however they’re running up against an empire that’s been extremely resistant to change for the better part of 100 years. They’ve definitely been at the forefront of changing how consumers want their media delivered to them however the lumbering giants that give them the content are steadfast in defending their regionally based business models. I’d honestly love to be proved wrong on this (although I’d still hold onto my VPN for other reasons) but I honestly can’t see a global Netflix in our future.
For all of my working life I pined for the ability to do my work from wherever I choose. It wasn’t so much that I wanted to work in my trackies, only checking email whenever it suited, no more I wanted to avoid having to waste hours of my day travelling to and from the office when I could just as easily do the work remotely. Last year, when I permanently joined the company I had been contracting to the year previous, I was given such an opportunity and have spent probably about half the working year since at home. For me it’s been a wonderfully positive experience and, to humblebrag for a bit, my managers have been thoroughly impressed with my quality of work. Whilst I’ve always believed this would be the case I never had much hard evidence to back it up but new research in this field backs up my conclusions.
Researchers at the University of Illinois created a framework to analyse telecommuting employee’s performance. They then used this to gain insight into data taken from 323 employees and their corresponding supervisors. The results showed a very small, positive effect for the telecommuting workers showing that their performance was the same or slightly better than those who were working in the office. Perhaps most intriguingly they found that the biggest benefit was shown when employees didn’t have the best relationship with their superiors, indicating that granting flexible working arrangements could be seen as something of an olive branch to smooth over employee relations. However the most important takeaway from this is that no negative relationship between telecommuting and work performance was found, showing that employees working remotely can be just as effective as their in office counterparts.
As someone who’s spent a great deal of time working from various different places (not just at home) with other people in a similar situation I have to say that my experience matches up with research pretty well. I tend to be available for much longer periods of time, simply because it’s easier to, and it’s much easier to focus on a particular task for an extended period of time when the distractions of the office aren’t present. Sure after a while you might start to wonder if you’ll be able to handle human contact again (especially after weeks of conference calls) but it’s definitely something I think every employer should offer, if they have the capability to.
It also flies in the face of Marissa Mayer’s decision to outright ban all telecommuting in Yahoo last year, citing performance concerns. Whilst I don’t disagree with the idea that telecommuting isn’t for everyone (I know a few people who’d likely end up like this) removing it as an option is incredibly short sighted. Sure, there’s value to be had in face time, however if their performance won’t suffer offering them flexible working arrangements like telecommuting can generate an awful lot of goodwill with your employees. I know that I’m far more likely to stick around with my current company thanks to their stance on this, even if I probably won’t be able to take advantage of it fully for the next couple years.
Hopefully studies like this keep getting published as telecommuting is fast becoming something that shouldn’t have to be done by exception. Right now it might be something of a novelty but the technology has been there for years and it’s high time that more companies started to make better use of it. They might just find it easier to hold on to more employees if they did and, potentially, even attract better talent because of it. I know it will take time though as we’re still wrestling with the 40 hour work week, a hangover over 150 years ago, even though we’ve long since past the time where everyone is working factories.
One day though, one day.
I’m a big lover of Steam. Whilst it had a rather rocky start, something that was exacerbated by the fact that I was still on dial up, since then the platform has managed to make me part with many of my dollars and I have done so gladly. Sure part of this is due to me moving up in the world, no longer being a poor uni student whose only indulgence was his World of Warcraft subscription, however Steam providing titles at a very reasonable price has also led me to spend more than I would have otherwise. So when rumours start to spread that Steam might be bringing things like music, TV shows and movies to the platform you can imagine the excitement I have at that prospect.
There’s been talk of Steam expanding beyond it’s current games and software market for some time now, ever since Valve announced the Steam Music overlay at the beginning of this year. There’s also already a few movies on the platform, like Free to Play and Indie Game: The Movie, and whilst they’re specifically about games it’s not much of a stretch to think that they’d extend the platform further. The only precedent not set so far is for TV shows however it’s not much of a stretch to see the same system working for that kind of content. There’s still a few questions to be answered about the service (When will it debut? How will its costs compare to other services? ) however if Steam can do for what it did for games for movies, TV and music you can bet your bottom dollar that it will be an incredibly positive thing for consumers.
The reason, for me as an Australia at least, is that there’s really no other alternative available to us. I was excited when Dendy Direct was announced, mostly because I’m a fan of their cinemas, however their pricing is nothing short of insane with a single season of a show costing anywhere from $20 to $40. Other services available here are either similarly priced or simply don’t have the catalogue of shows that many of us want to watch. Even if the services available here do have the shows they’re either significantly delayed or released in such a way that’s incongruent to the way they were released overseas, like Netflix original series being released weekly instead of all in one hit.
There’s always the geo-unblocking tools to get us Netflix of course but that’s really only a stopgap to a better solution.
We’re getting closer to a proper solution though as there’s been at least one notable entrant into this field that’s not completely bullshit. AnimeLab, run by Madman (the Australian anime distributor), offers up complete anime series for any and all to watch for free, including ones that are only just being released in Japan. Whilst I’m sure the free ride won’t last forever it does show that there’s demand for such a service in Australia, even within the niche interest area that is anime. I’m hopeful that this will encourage other services to start considering branching out into Australia sooner rather than later as it honestly can’t come fast enough.
There’s no question that Apple was the primary force behind the Bring Your Own Device (BYOD) movement. It didn’t take long for every executive to find themselves with an iPad in their hands, wondering why they had to use their god damn Blackberry when the email experience on their new tablet was so much better. Unfortunately, as is the case with most Apple products, the enterprise integration was severely lacking and the experience suffered as a result. Today the experience is much better although that’s mostly the result of third party vendors developing solutions, not so much Apple developing the capability themselves. It seems that after decades of neglecting the enterprise Apple is finally ready to make a proper attempt at it, although in the most ass backwards way possible.
Today Apple announced that it would be partnering with IBM in order to grow their mobility offerings starting with a focus on applications, cloud services and device supply and support. IBM is going to start off by developing 100 “industry specific” enterprise solutions, essentially native applications for the iPhone and iPad that are tailored for specific business needs. They’ll also be growing their cloud offering with services that are optimized for iOS with a focus on all the buzzwords that surround the BYOD movement (security, management, analytics and integration). You’ll also be able to source iOS devices from IBM with warranty backing by Cupertino, enabling IBM to really be your one stop shop for all things Apple related in the enterprise.
At a high level this would sound like an amazing thing for anyone who’s looking to integrate Apple products into their environment. You could engage IBM’s large professional services team to do much of the leg work for you, freeing you from worrying about the numerous issues that come from enabling a BYOD environment. The tailored applications would also seem to solve a big pain point for a lot of users as the only option most enterprises have available to them today is to build their own, a significantly costly endeavour. Plus if you’re already buying IBM equipment their supply chain will already be well known to you and your financiers, lowering the barrier to entry significantly.
Really it does sound amazing, except for the fact that this partnership is about 5 years late.
Ever since everyone wanted their work email on an iPhone there’s been vendors working on solutions to integrate non-standard hardware into the enterprise environment. The initial solutions were, frankly, more trouble than they were worth but today there are a myriad of applications available for pretty much every use case you can think of. Indeed pretty much every single thing that this partnership hopes to achieve is already possible today, not at some undetermined time in the future.
This is not to mention that IBM is also the last name you’d think of when it comes to cloud services, especially when you consider how much business they’ve lost as of late. The acquisition of SoftLayer won’t help them much in this regard as they’re building up an entirely new capability from scratch which, by definition, means that they’re offering will be behind everything else that’s currently available. They might have the supply chains and capital to be able to ramp up to public cloud levels of scalability but they’re doing it several years after everyone else has, in a problem space that is pretty much completely solved.
The only place I can see this partnership paying dividends is in places which have yet to adopt any kind of BYOD or mobility solution which, honestly, is few and far between these days. This isn’t an emerging market that IBM is getting in on the ground floor on, it’s a half decade old issue that’s had solutions from numerous vendors for some time now. Any large organisation, which has been IBM’s bread and butter since time immemorial, will already have solutions in place for this. Transitioning them away from that is going to be costly and I doubt IBM will be able to provide the requisite savings to make it attractive. Smaller organisations likely don’t need the level of management that IBM is looking to provide and probably don’t have a working relationship with Big Blue anyway.
Honestly I can’t see this working out at all for IBM and it does nothing to improve Apple’s presence in the enterprise space. The problem space is already well defined with solid solutions available from multiple vendors, many of which have already have numerous years of use in the field. The old adage of never getting fired for buying IBM has long been irrelevant and this latest foray into a field where their experience is questionable will do nothing to bring it back. If they do manage to make anything of this I will be really surprised as entering a market this late in the piece rarely works out well, even if you have mountains of capital to throw at it.
My fellow IT workers will likely be familiar with the non-standard hours our work can require us to keep. Since we’re an essential service any interruption means that other people are unable to work so we’re often left with no choice to continue working long after everyone has left. Thankfully I moved out of doing that routinely long ago however I’ve still had my fair share of long weeks, weekend work and the occasional all-nighter in order to make sure a job was done properly. I’ll never work more hours simply for the sake of it though as I know my productivity rapidly drops off after a certain point, meaning the extra hours aren’t particularly effective. Still though there seems to be something of a worship culture around those who work long hours, even if the results of doing so are questionable.
My stance has always been that everyone should be able to complete their work in the standard number of work week hours and if goals aren’t being met it’s a fault of resourcing, not the amount of effort being put in. Too often though I’ve seen people take it upon themselves to make up for these shortcomings by working longer hours which feeds into a terrible cycle from which most projects can’t recover. It often starts with individuals accommodating bursts of work which falsely set the expectation that such peaks can be routinely accommodated. Sure it’s only a couple extra hours here or there but when each member of a team of 20 does that you’re already a resource behind and it doesn’t take much to quickly escalate from there.
The problem, I feel, stems from the association that hours worked is equal to the amount of contribution. In all cases this is simply not true as many studies have shown that, even with routine tasks with readily quantifiable output, your efficiency degrades over time. Indeed my highly unscientific observations, coupled with a little bit of online research, shows that working past the 8 hour mark per day will likely lead to heavy declines in productivity over time. I’ve certainly noticed that among people I’ve worked alongside during 12+ hour days as the pace of work rapidly declines and complex issues take far longer to solve than they would have at the beginning of the day.
Thus the solution is two fold: we need to stop idolizing people who put in “long hours” and be steadfast when it comes to taking on additional work. Stopping the idolization means that those who choose to work longer hours, for whatever reasons, are no longer used as a standard by which everyone else is judged. It doesn’t do anyone any good to hold everyone to standards like that and will likely lead to high levels of burnout and turnover. Putting constraints around additional work means that no one should have to work more than they need to and should highlight resourcing issues long before it becomes a problem that can’t be handled.
I’m fortunate to work for a company that values results over time invested and it’s been showing in the results that our people have been able to deliver. As someone who’d worked in organisations where the culture valued hours and the appearance being busy over everything else it’s been extremely refreshing, validating my long held beliefs about work efficiency and productivity. Working alongside other agencies that don’t have this culture has provided a stark reminder of just how idiotic the idolization of overtime is and why I’ll likely be sticking around this place for a while to come.
The IT industry has always been one of rapid change and upheaval, with many technology companies only lasting as long as they could innovate for. This is at odds with the traditional way businesses operated, preferring to stick to predictable cycles and seek gains through incremental improvements in process, procedure and marketing. The eventuality of this came in the form of the traditional 3~5 year cycle that many enterprises engaged in, upgrading the latest available technology usually years after it had been released. However the pace of innovation has increased to the point where such a cycle could leave an organisation multiple generations behind and it’s not showing any signs of slowing down soon.
I mentioned last year how Microsoft’s move from a 3 year development cycle to a yearly one was a good move, allowing them to respond to customer demands much more quickly than they were previously able to. However the issue I’ve come across is whilst I, as a technologist, love hearing about the new technology the customer readiness for this kind of innovation simply isn’t there. The blame for this almost wholly lays at the feet of XP’s 12 year dominance of the desktop market, something which even the threat of no support did little to impact its market share. So whilst the majority may have made the transition now they’re by no means ready for a technology upgrade cycle that happens on a yearly basis. There are several factors at play with this (tools, processes and product knowledge being the key ones) but the main issue remains the same: there’s a major disjoint between Microsoft’s current release schedule and it’s adoption among its biggest customers.
Microsoft, to their credit, are doing their best to foster rapid adoption. Getting Windows 8.1 at home is as easy as downloading an app from the Windows store and waiting for it to install, something you can easily do overnight if you can’t afford the down time. Similarly the tools available to do deployments on a large scale have been improved immensely, something anyone who’s used System Center Configuration Manager 2012 (and it’s previous incarnations) will attest to. Still even though the transition from Windows 7 to 8 or above is much lower risk than from XP to 7 most enterprises aren’t looking to make the move and it’s not just because they don’t like Windows 8.
With Windows 8.2 slated for release sometime in August this year Windows 8 will retain an almost identical look and feel to that of its predecessors, allowing users to bypass the metro interface completely and giving them back the beloved start menu. With that in place there’s almost no reason for people to not adopt the latest Microsoft operating system yet it’s likely to see a spike in adoption due to the inertia of large IT operations. Indeed even those that have managed to make the transition to Windows 8 probably won’t be able to make the move until 8.3 makes it debut, or possibly even Windows 9.
Once the Windows 8 family becomes the standard however I can see IT operations looking to move towards a more rapid pace of innovation. The changes between the yearly revisions are much less likely to break or change core functionality, enabling much of the risk that came with adopting a new operating system (application remediation). Additionally once the IT sections have moved to better tooling upgrading their desktops should also be a lot easier. I don’t think this will happen for another 3+ years however as we’re still in the midst of a XP hangover, one that’s not likely to subside until it’s market share is in the single digits. Past that we administrators then have the unenviable job of convincing our businesses that engaging in a faster product update cycle is good for them, even if the cost is low.
As someone who loves working with the latest and greatest from Microsoft it’s an irritating issue for me. I spend countless hours trying to skill myself up only to end up working on 5+ year old technology for the majority of my work. Sure it comes in handy eventually but the return on investment feels extremely low. It’s my hope that the cloud movement, which has already driven a lot of businesses to look at more modern approaches to the way they do their IT, will be the catalyst by which enterprise IT begins to embrace a more rapid innovation cycle. Until then however I’ll just lament all the Windows Server 2012 R2 training I’m doing and wait until TechEd rolls around again to figure out what’s obsolete.
Australia is an incredibly strong country economically being ranked as the 12th largest by GDP of all countries in the world. When you then consider that our population is a fraction of that of many countries that are above us (Canada is the closest in size and is in 11th spot with a population about 50% bigger than ours) it means that, on average, Australians are more wealthy than their global counterparts. This is somewhat reflected in the price we pay for certain things however it doesn’t take a lot of effort to show that we pay more than you’d expect for many goods and services. The most notable being media as we lack any of the revolutionary services that drive their prices down (Netflix, Hulu, etc.) or any viable alternatives. It gets even worse though as it seems we also pay more just to go to the cinema.
The graphic above shows that Australia, along with a few other developed nations, pay an extraordinary amount more than others do when the costs are normalized. The differences between the lowest and the highest aren’t exactly huge, you’re looking at a spread of about $15 from the cheapest to the most expensive, however this is yet another indication of just how much more Australia pays for its media than anyone else does. In essence we’re paying something on the order of 25%~50% more for the same product yet the excuses that the industry once relied on, that Australia is “really far away”, don’t really hold water anymore.
It should come as little surprise then that Australians are then far more likely to pirate than any other developed country, sometimes representing up to almost 20% of new release piracy. There have been some inroads made into attempting to reduce this number, with a few stations “fast-tracking” episodes (although they still usually carry a delay) or giving users access to an online option, however the former doesn’t solve the problem entirely and the latter was unfortunately repealed. The hunger for the media is there it’s just that a reasonably priced option has failed to materialize for Australian users (and if you mention Quickflix I’ll gut you) which has led to these dramatic figures.
Now I’d be entirely happy with doing the slightly dodgy and getting myself a Netflix or Hulu account via a VPN or geo-unblocking service however my bandwidth isn’t up to the task of streaming media at 720p. Sure it could probably do a lower resolution but I didn’t invest as much as I did in my entire home theatre system to have it operate at a sub-par level. This issue was supposed to go away with the NBN being just around the corner but I literally have no idea when that might be coming nor what incarnation of it I will end up getting. So it seems that, at least for now, I’m stuck in digital limbo where I either fall to piracy or being gouged repeatedly.
Neither of these issues are beyond fixing and indeed it’s been shown that once a reasonably priced alternative becomes available people ditch piracy in a heartbeat. Heck I know that for me once Steam became widely available my game spend increased dramatically, especially after I found sites like DLcompare. I can assure you that the same will happen once a media based alternative comes to Australia and I’m not the only one who has the disposable income to support it.
Companies buying other companies is usually nothing to get excited about. Typically it’s a big incumbent player buying up a small company that’s managed to out-innovate them in a particular market segment so instead of losing market share the incumbent chooses to acquire them. Other times it’s done in order to funnel the customer base onto the core product that the incumbent is known for much like Google did with many of its acquisitions like Android. Still every so often a company will seemingly go out of its way to acquire another that honestly doesn’t seem to fit and we’re all left wondering what the hell they’re thinking. Facebook has done this today acquiring the virtual reality pioneer OculusVR.
Facebook and OculusVR could not be more different, one being the biggest social network in the world that’s got 1.23 billion active users per month and the other being a small company with only 50 employees focusing on developing virtual reality technology. Whilst the long winded PR speech from Zuckerberg seems to indicate that they’re somehow invested in making the Oculus Rift the new way of experiencing the world it’s clear that Facebook is going to be running it as it’s own little company, much like Instagram and WhatsApp before it. With the recent rumours of Facebook looking to purchase drone manufacturer Titan Aerospace, another company that doesn’t seem like a good fit for the Facebook brand, it begs the question: what’s Facebook’s plan here?
Most of the previous high profile acquisitions aligned directly with Facebook’s weaknesses, namely how badly they were doing in the mobile space. Instagram fit the bill perfectly in this regard as they managed to grow a massive mobile-only social network that rivalled Facebook’s own mobile client for usage. Whilst many questioned whether paying $1 billion for a company that hadn’t generated a single dollar was worth it for them it seems like Facebook got some value out of it as their mobile experience has improved drastically since then. WhatsApp seemed to be in a similar vein although the high cost of acquisition (even though this one had some revenue to back it up) makes it much more questionable than the Instagram purchase. Still for both of them it was filling in a gap that Facebook had, OculusVR doesn’t do that.
From my perspective it seems like Facebook is looking to diversify its portfolio and the only reason I can think of to justify that is their core business, the Facebook social network, is starting to suffer. I can’t really find any hard evidence to justify this but it does seem like the business community feels that Facebook is starting to lose its younger audience (teens specifically) to messenger apps. Acquiring WhatsApp goes some way to alleviate this but acquiring the most popular app every couple years isn’t a sustainable business model. Instead it looks like they might be looking to recreate the early Google environment, one that spawned multiple other lines of business that weren’t directly related to their core business.
This was definitely a successful model for Google however most of the products and acquisitions they made at a similar stage to Facebook were centred around directing people back to their core products (search and advertising). Most of the moonshot ideas, whilst showing great initial results, have yet to become actual lines of business for them with the two most notable ones, Glass and the self-driving car, still in the developmental or early adopter phase. Facebook’s acquisition of OculusVR doesn’t really fit into this paradigm however with OculusVR likely going to be the first to market with a proper virtual reality headset it might just be a large bet that this market segment will take off.
Honestly it’s hard to see what Facebook’s endgame is here, both for OculusVR and themselves as a company. I think Facebook will stay true to their word about keeping OculusVR independent but I have no clue how they’ll draw on the IP and talent their to better themselves. Suffice to say not everyone is of the same opinion and this is something that Facebook and OculusVR are going to have to manage carefully lest the years of goodwill they’ve built up be dashed in a single movement. I won’t go as far to say that I’m excited to see what these too will do together but I’ll definitely be watching with a keen interest.
In the time that Microsoft has been a company it has only known two Chief Executive Officers. The first was unforgettably Bill Gates, the point man of the company from its founding days that saw the company grow from a small software shop to the industry giant of the late 90s. Then, right at the beginning of the new millennium, Bill Gates stood down and passed the crown to long time business partner Steve Ballmer who has since spent the better part of 2 decades attempting to transform Microsoft from a software company to a devices and services one. Rumours had been spreading about who was slated to take over Ballmer for some time now and, last week, after much searching Microsoft veteran Satya Nadella took over as the third CEO of the venerable company and now everyone is wondering where he will take it.
For those who don’t know him Nadella’s heritage in Microsoft comes from the Server and Tools department where he’s held several high ranking positions for a number of years. Most notably he’s been in charge of Microsoft’s cloud computing endeavours, including building out Azure which hit $1 billion in sales last year, something I’m sure helped to seal the deal on his new position. Thus many would assume that Nadella’s vision for Microsoft would trend along these lines, something which runs a little contrary to the more consumer focused business that Ballmer sought to deliver, however his request to have Bill Gates step down as Chairman of the Board so that Nadella could have him as an advisor in this space says otherwise.
As with any changing of the guard many seek to impress upon the new bearer their wants for the future of the company. Nadella has already come under pressure to drop some of Microsoft’s less profitable endeavours including things like Bing, Surface and even the Xbox division (despite it being quite a revenue maker, especially as of late). Considering these products are the culmination of the effort of the 2 previous CEOs, both of which will still be involved in the company to some degree, taking an axe to them would be a extraordinarily hard thing to do. These are the products they’ve spent years and billions of dollars building so dropping them seems like a short sighted endeavour, even if it would make the books look a little better.
Indeed many of these business units which certain parties would look to cut are the ones that are seeing good growth figures. The surface has gone from a $900 million write down disaster to losing a paltry $39 million in 2 quarters, an amazing recovery that signals profitability isn’t too far off. Similarly Bing, the search engine that we all love to hate on, saw a 34% increase in revenue in a single quarter. It’s not even worth mentioning the Xbox division as it’s been doing well for years now and the release of the XboxOne with it’s solid initial sales ensures that remains one of Microsoft’s better performers.
The question then becomes whether Nadella, and the board he now serves, sees the on-going value in these projects. Indeed much of the work they’ve been doing in the past decade has been with the focus towards unifying many disparate parts of their ecosystem together, heading towards that unified nirvana where everything works together seamlessly. Removing them from the picture feels like Microsoft backing itself into a corner, one where it can be easily shoehorned into a narrative that will see it easily lose ground to those competitors it has been fighting for years. In all honesty I feel Microsoft is so dominant in those sectors already that there’s little to be gained from receding from perceived failures and Nadella should take this chance to innovate on his predecessor’s ideas, not toss them out wholesale.