What Kind of Microsoft Can We Expect From Satya Nadella?

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.

New Microsoft Chief Executive Officer of, Satya NadellaFor 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.

 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.