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.
No beating around the bush on this one, Steve Jobs has resigned:
To the Apple Board of Directors and the Apple Community:
I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.
I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.
As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.
I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.
I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.
The news shouldn’t come as a shock to anyone. Jobs has been been dealing with health problems for many years now and he’s had to scale back his involvement with the company as a result. The appointment of Tim Cook as the new CEO shouldn’t come as a surprise either as Cook has been acting as the interim CEO when Jobs has been absence during the past few years. Jobs’ involvement in Apple won’t completely cease either if the board approves his appointment which I doubt they’ll think twice about doing. The question on everyone’s lips is, of course, where Apple will go to from here.
The stock market understandably reacted quite negatively with Apple shares coming down a whopping 5.23% a the time of writing. The reasons behind this are many but primarily it comes down to the fact that Apple, for better or for worse, has built much of their image around their iconic CEO. Jobs has also had strong influences over the design of new products but Cook, whilst being more than capable of stepping up, has no such skills being more of a traditional operations guy. Of course no idea exists in a vacuum and I’m sure the talented people at Apple will be more than capable of continuing to deliver winning products just as they did with Jobs at the helm.
But will that be enough?
For the most part I’d say yes. Whilst the Jobs fan club might be one of the loudest and proudest out there the vast majority of Apple users are just interested in the end product. Whilst they might lose Jobs’ vision for product design (although even that’s debatable since he’s still on the board) Apple has enough momentum with their current line of products to carry them over any rough patches whilst they find their feet in a post Jobs world. The stock market’s reaction is no indicator of consumer confidence for Apple and I’m sure there’s only a minority of people who’ve decided to stop buying Apple products now that Jobs isn’t at the helm.
Apple’s current success is undeniably because of Jobs’ influence and his absence will prove to be a challenge for Apple to overcome. I highly doubt that Apple will suffer much because of this (the share price really only affects the traders and speculators) with a year or two of products in the pipeline that Jobs would have presided over. The question is will their new CEO, or any public face of Apple, be able to cultivate a similar image on the same level as Jobs did.
So last Friday saw the announcement that HP was spinning off their WebOS/Tablet division, a move that sent waves through the media and blogosphere. Despite being stuck for decent blog material on the day I didn’t feel the story had enough legs to warrant investigation, I mean anyone but the most dedicated of WebOS fans knew that the platform wasn’t going anywhere fast. Heck it took me all of 30 seconds on Google to find these latest figures that have it pegged at somewhere around 2%, right there with Symbian (those are smart phone figures, not overall mobile) trailing the apparently “failing” Windows Phone 7 platform by a whopping 7%. Thus the announcement that they were going to dump the whole division wasn’t so much of a surprise and set about trying to find something more interesting to write about.
Over the weekend though the analysts have got their hands on some juicy details that I can get stuck into.
Now alongside the announcement that WebOS was getting the boot HP also announced that it was considering exiting the PC hardware business completely. At the moment that would seem like a ludicrous idea as that division was their largest with almost $10 billion in revenue but their enterprise services division (which is basically what used to be EDS) is creeping up on that quite quickly. Such a move also wouldn’t see them exit the server hardware business either which would be a rather suicidal move from them considering they’re the second largest player there with 30% of the market. More it seems like HP wants out of the consumer end of the market and wants to focus on enterprise software, services and the hardware that supports them.
It’s a move that several similar companies have taken in the past when faced with downwards trending revenues in the hardware sector. Back when I worked at Unisys I can remember them telling me about how they now derive around 70% of their revenue from outsourcing initiatives and only 30% from their mainframe hardware sales. They used to be a mostly hardware oriented company but switched to professional services and outsourcing when they had negative growth for several years. HP on the other hand doesn’t seem to be suffering any of these problems, which begs the question why would they bother exiting what seems to be a lucrative market for them?
It was a question I hadn’t really considered until I read this post from John Gruber. Now I’d known that HP had gotten a new CEO since Mark Hurd was ejected over that thing with former PlayBoy Girl Jodie Fisher (and his expense account, but that’s no where near as fun to write) but I hadn’t caught up with who they’d hired as his replacement. Turns out it is former SAP CEO Leo Apotheker. Now their decisions to spin off their WebOS (and potentially their PC division) make a lot of sense as that’s the kind of company Apotheker has quite a lot of experience in. Couple that with their decision to buy Autonomy, another enterprise software company, it seems almost certain that HP is heading towards the end goal of being a primarily serviced based company.
Of course with HP exiting the consumer market after only being in it for such a short time people started to wonder if there was ever going to be a serious competitor to Apple’s offerings, especially in the tablet market. Indeed it doesn’t look good for anyone trying to crack into that market as it’s pretty much all Apple all the time and if a multi-billion dollar company can’t do it then there’s not much hope for anyone else. However Android has made some impressive inroads into this Apple dominated niche, securing a solid 20% of the market. Just like it did with the iPhone before it no single vendor will come to completely decimate Apple in this space but overall Android’s dominance will come from the sheer variety that they offer. We’ve still yet to see Galaxy S2-esque release in the Android tablet space but I’m sure one’s not too far off.
It’ll be interesting to see how HP evolves itself over the next year or so under Apotheker’s leadership as it’s current direction is vastly different to that of the HP in the past. This isn’t necessarily a good or bad thing for the company either as whilst they might have any cause for concern now this transition could avoid the pain of attempting to do it further down the track. The WebOS split off is just the first step in this long journey for HP and there will be many more for them to take if they’re to make the transition to a professional services company.
I’ve had quite a few phones in my time but only 2 of them have ever been Nokias. The first was the tiny 8210 I bought purely because everyone else was getting a phone so of course I needed one as well. The second was an ill-fated N95 which, despite being an absolutely gorgeous media phone, failed to work on my network of choice thanks to it being a regional model that the seller neglected to inform me about. Still I always had a bit of a soft spot for Nokia devices because they got the job done and they were familiar to anyone who had used them before, saving many phone calls when my parents upgraded their handsets. I’ve even wondered loudly why developers ignore Nokia’s flagship mobile platform despite it’s absolutely ridiculous install base that dwarfs all of its competitors, acknowledging that it’s mostly due to their lack of innovation on the platform.
Then on the weekend a good friend of mine tells me that Nokia had teamed up with Microsoft to replace Symbian with Windows Phone 7. I had heard about Nokia’s CEO releasing a memo signalling drastic changes ahead for the company but I really didn’t expect that to result in something this drastic:
Nokia CEO Stephen Elop announced a long-rumored partnership with Microsoft this morning that would make Windows Phone 7 Nokia’s primary mobile platform.
The announcement means the end is near for Nokia’s aging Symbian platform, which many (myself included) have criticized as being too archaic to compete with modern platforms like the iPhone OS or Android. And Nokia’s homegrown next-generation OS, MeeGo, will no longer be the mythical savior for the Finnish company, as it’s now being positioned more as an experiment.
We’ve argued for some time that a move to Windows Phone 7 would make the most sense for Nokia, and after Elop’s dramatic “burning platform” memo last weekend, it was all but certain that the company would link up with Microsoft.
It’s a bold move for both Nokia and Microsoft as separated they’re not much of a threat to the two other giants in the mobile industry. However upon combining Nokia is ensuring that Windows Phone 7 reaches many more people than it can currently, delivering handsets at price ranges that other manufacturers just won’t touch. This will have a positive feedback effect of making the platform more attractive to developers which in turn drives more users to come to the platform when their applications of choice are ported or emulated. Even their concept phones are looking pretty schmick:
The partnership runs much deeper than just another vendor hopping onto the WP7 bandwagon however. Nokia has had a lot more experience than Microsoft in the mobile space and going by what is said in an open letter that the CEOs of both companies wrote together it looks like Microsoft is hoping to use that experience to further refine the WP7 line. There’s also a deep integration in terms of Microsoft services (Bing for search and adCenter for ads) and interestingly enough Bing Maps won’t be powering Nokia’s WP7 devices, it will still be OVI Maps. I’m interested to see where this integration heads because Bing Maps is actually a pretty good product and I was never a fan of the maps on Nokia devices (mostly because of the subscription fee required). They’ll also be porting all their content streams and application store across to the Microsoft Marketplace which is expected considering the level of integration they’re going for.
Of course the question has been raised as to why they didn’t go for one of the alternatives, namely their MeeGo platform or Google Android. MeeGo, for all its open source goodness, hasn’t really experienced the same amount of traction that Android has and has firmly been in the realms of “curious experiment” for the past year, even if Nokia is only admitting to it today. Android on the other hand would’ve made a lot of sense, however it appears that Nokia wanted to be an influencer of their new platform of choice rather than just another manufacturer. They’d never get this level of integration from Google unless they put in all the work and then realistically that does nothing to help the Nokia brand, it would all be for Google. Thus WP7 is really the only choice with these considerations in mind and I’m sure Microsoft was more than happy to welcome Nokia into the fray.
For a developer like me this just adds fuel to the WP7 fire that’s been burning in my head for the past couple months. Although it didn’t take me long to become semi-competent with iPhone SDK the lure of easy WP7 development has been pretty hard to ignore over the past couple months, especially when I have to dive back into Visual Studio to make API changes. Nokia’s partnership with Microsoft means that there’s all the more chance that WP7 will be a viable platform for the long term and as such any time spent developing on it is time well spent. Still if I was being truly honest with myself I’d just suck it up and do Android anyway but after wrangling with Objective-C for so long I feel like I deserve a little foray back into the world of C# and Visual Studio goodness and this announcement justifies that even more.
Time after time I’ve been regaled with stories of greedy executives and their board members taking away lucrative packages whilst their companies flail in the wind. Whilst I admit that there are some particularly nasty individuals who have rode companies cheerfully into the ground whilst making themselves personally rich, there are quite a few executive staff out there who cop flack just because their position comes with what appears to be a large pay check. When in reality, their success is so deeply tied to the company’s profitability that if the company were to fail, they’d be as bankrupt as their workers.
Yet again I’m looking at the media for mis-representing the situation in order to create headlines to sell papers (funny little circle of corporate greed here). Let’s have a look at some companies and what their CEO’s are taking home in pay:
Looking at figures like this you can see that many executives are financially bound to the success of the company. This is a common (and strategically sound) idea, since the CEO is the one who holds all the risk for the future viability of the company. People will often pine about the disparity between the top dog and blue collar worker but they fail to see the disparity in accountability, responsibility and skill that is involved in attaining such positions. An entry level worker simply does not have the skills and experience required in order to guide a company to financial prosperity.
However I do not support companies who have received government bailouts giving their executives any form of bonus, additional stock options or continued non-equity compensation. If a company is failing so badly that the government needs to save it your performance as a CEO is tantamount to the company being bankrupt, and your pay should reflect this. It would seem that President Obama also supports this viewpoint.
So, the next time the media sends you a story about the CEO or executive board being paid millions whilst the working class suffers please do a bit of digging to see exactly what their getting paid. Once you’ve done that have a look at the shareholders of the company to, as they’re the people most responsible for driving the CEO to ensure the long term survivability of the company.
Really, it’s better to keep your finger pointed squarely at yourself so you act, rather than blaming everyone else for your problems.