The transition at Microsoft

The Microsoft board obviously thought highly of Mr. Nadella, who beat more than 100 other contenders for the post, in a search that took approximately 5 months and ended last week. Was the choice of Mr. Nadella the result of a popularity contest at Microsoft or is he actually someone who can bring radical changes […]

The Microsoft board obviously thought highly of Mr. Nadella, who beat more than 100 other contenders for the post, in a search that took approximately 5 months and ended last week. Was the choice of Mr. Nadella the result of a popularity contest at Microsoft or is he actually someone who can bring radical changes to the company?
Although Mr. Nadella has led some important projects, such as the “bing” search engine – which I don’t think has picked up relative to Google search, many in the popular media see him as a softie; he’s no Steve Jobs, but he is someone who is said to be extremely popular with the rank and file at Microsoft.
In a company as complex as Microsoft, with over 100,000 employees and a market capitalization of over $300 billion, the CEO job will challenge even the most talented technologist. Picking from inside is usually done to preserve the core, but in a situation where the core needs significant overhaul, as in the present-day Microsoft, the expected prescription would have been an outsider to shake things up.
Thus, the rational for picking Mr. Nadella might have had to do with the recognition of the difficulties that an outsider could face in such a complex terrain. So, Mr. Nadella might as well be the most qualified insider; after all there are speculations that a few capable candidates from outside of Microsoft opted out of consideration. The position (chairmanship) vacated by Mr. Gates will now be occupied by John Thompson, the former Chief Executive of Symantec Corp., the antivirus software company. Although Mr. Ballmer, the former CEO, will pack out and leave Microsoft campus, he will remain on the board.
To me, the most interesting aspect of the transition at Microsoft is not the choice of Mr. Nadella per se, but rather the decision to have Bill Gates, Microsoft co-founder, give up his chairmanship position to become the technical advisor to Mr. Nadella, the 46-year-old, 22-year Microsoft veteran. Mr. Gates said he would devote one-third of his time to help Mr. Nadella structure the company’s strategy in the face of declining PC business and significantly increasing smartphone and server businesses. With Mr. Gates’ return, one is obviously tempted to think that the CEO job is considered to be way too much for Mr. Nadella, making one wonder whether or not Mr. Nadella can, or should, have a free hand to chart the course of the company. Mr. Nadella’s apparently enthusiastic approval of Mr. Gates’ return suggests that Mr. Nadella himself might not have thought he could do it alone. The question then is whether or not the mentoring scheme will get Microsoft on top again, with Samsung and Apple so way ahead in the critical technologies.
Mr. Gates is obviously well-known for his technical acumen, but it does not seem he has any track records in smartphones, the device of the near future. But does it really matter? I believe we can only speculate at this point. Although smartphones rule these days, it’s not clear what the business prospects will turn out to be in the near future. For one thing, the smartphone business seems to be saturating, with some glut in the supply. That is, too many companies are selling basically the same kind of devices. The high-end devices, such as the typical ones from Apple and Samsung are not cheap; so you can envision a situation where consumers will want to hang on to their devices for as long as possible.
A new ad by Microsoft seems to suggest the company’s course that Mr. Nadella (and Mr. Gates) will need to chart for the way forward. The ad ends like this: “The device for everything in your life.” This is a very catchy phrase and it grabbed me immediately I heard it – the device for everything in my life! Now, talk is cheap; so does Microsoft really have a device for everything in your life?
Of course, the device in focus here is Microsoft Surface, which is a laptop/tablet combo, and is being touted by Microsoft as the ultimate productivity tool of today: “Surface combines the best of both. Run the latest version of Office–including Outlook–and other business apps. Whether on the move or at your desk, Surface fits effortlessly into any workflow.”
I actually believe in the productivity features of Surface. The only problem for Surface though is that most folks do not buy tablets or smartphones for office productivity! Folks buy smartphones/tablets for the little everyday things, like “face-timing,” accessing the web, sending/receiving texts/emails, taking pictures (selfies, anyone?), accessing app stores with zillions of free apps, etc. I am afraid that the iPhones and the Galaxies do provide these capabilities to the satisfaction of consumers, a reality that should provide a natural differentiation scheme for Microsoft’s smartphone/tablet strategy.
That is, Microsoft needs to realize that Surface may not be the best device for everything in your life, after all.
The other big thing in high tech today is servers – those farms of networked, usually commodity, computer devices, that are the gateway to the cloud. Poor Azure, the competition is quite stiff in this direction as well. The foregoing issues are obviously food-for-thought for Mr. Nadella (and Mr. Gates).
The bottom line in this article is that Microsoft has appointed a new CEO, who seems to need a big guy to look over his shoulder.