Microsoft’s New CEO: Does Anything Change?

February 5th, 2014

In recent days, speculation about the next CEO for Microsoft turned from possible outsiders to a long-time insider, Satya Nadella, the executive vice president of the company’s Cloud and Enterprise group. That news was confirmed Tuesday morning, as was the report that board chairman Bill Gates had stepped down and will become Technology Adviser; I hesitate to use the term “official nag.” This means, of course, that Microsoft’s co-founder will still remain a powerful force within the company.

But is that a good thing?

Remember that Nadella has worked at Microsoft for 22 years, during which time he has participated in the change from Windows dominating the computing world to the rise of smartphones and tablets, both of which found Microsoft wanting. And don’t forget the tepid rollout of Windows 8, which is regarded even by Microsoft fans as a failure.

Now it’s already clear that the culture may still change at Microsoft, witness the report that Nadella tends to be a low-key personality who likes to play well with others, as opposed to the bombastic Steve Ballmer, and Gates, the classic image of the computer nerd. He also wears hoodies, according to the publicity photo, which may signal some new fashion trend at Microsoft, or maybe it’s just a poor effort to make turn him into a hipper executive.

What’s more, Nadella’s experience in cloud and enterprise services wouldn’t seem to have much connection to selling Surface tablets and Nokia smartphones. I did watch some videos featuring interviews with him at various industry events, and Nadella came across as artificial in regurgitating the company line on the various services he was touting, such as the Bing search engine. Perhaps the corporate PR people tried just a little too hard to tutor him in public speaking or handling interviews.

In addition to being an engineer, though, Nadella also has an MBA, meaning he is schooled in business-related matters.

The real question, though, is whether this new personality will be able to pull the disparate parts of Microsoft together and make them focus on new strategies that will fix the problems facing the company. Although profitable at its core enterprise products and services, Microsoft has clearly had difficulty adapting to the mobile revolution. The Bing search engine, the only viable competitor to Google, continues to lose money.

So far, Nadella has said he approves of last year’s corporate reorganization, and the curious decision to acquire Nokia’s mobile handset division. His reign as CEO, therefore, appears to promise more of the same, with a different personality as the front person. But how does that solve Microsoft’s persistent problems? How does saying the course convince more people to ditch Windows XP, first released in 2001, and adopt Windows 8? Indeed, a recent survey of Web traffic showed XP gaining slightly, more so than Windows 8/8.1. That ought to be an embarrassing wake up call.

I suppose it’s possible, though, that Nadella will play it cool for the first few months, and gradually make changes that may or may not have a serious impact on the company’s future direction. But the increased presence of Gates as an advisor may argue against major changes. I wonder how Nadella can exert any semblance of independence with Gates watching over his shoulder.

The larger question, though, is just how much time Microsoft has to turn things around, and whether there’s enough time to do what’s necessary. I’ve read a number of commentaries suggesting future changes, such as focusing on the core businesses, and spinning off the entertainment division that includes the Xbox. It’s also possible Bing might be discarded, although that is one of the projects in which Nadella was involved.

Besides, if Bing goes away, or is sold off, that pretty much leaves Google without any potential competition in search. Hiring a person who is a cloud service specialist would argue against such a move.

Now when Steve Jobs returned to Apple and became iCEO, he moved quickly to shore up the company’s bottom line and shed underperforming products. Nadella is taking control of a company that is still hugely profitable, though declining in influence. There is less need to rush into anything, and any revisions in corporate vision and strategy would appear to be more gradual.

I would hope, however, that the newly-minted executive won’t just be a caretaker, but will make the right moves to make Microsoft more competitive in the 21st century, and not a relic of the last century. The continued success in the enterprise does mean that Microsoft might be able to rest on its laurels for a while, but the pressures to straighten things out will only grow.

Perhaps it’s corporate spin, but two sentences from Nadella, which seem to have been filtered through the PR machine, may leave room for hope: “Our industry does not respect tradition — it only respects innovation. This is a critical time for the industry and for Microsoft.”

Of course, time will tell whether Nadella is the sort of individual who can strike a different course and persuade those around him to accept his vision and rally behind him. One of Microsoft’s endemic problems has resulted from different divisions at seeming loggerheads to each other. One hopes the future won’t include more failed attempts to spread the Windows “everywhere” mantra, but I don’t expect any immediate change.

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4 Responses to “Microsoft’s New CEO: Does Anything Change?”

  1. Articles you should read (Feb 5) …. says:

    […] “Microsoft’s new CEO: does anything change?: In recent days, speculation about the next CEO for Microsoft turned from possible outsiders to a long-time insider, Satya Nadella, the executive vice president of the company’s Cloud and Enterprise group. That news was confirmed Tuesday morning, as was the report that board chairman Bill Gates had stepped down and will become Technology Adviser; I hesitate to use the term “official nag.” — Read the article on > […]

  2. dfs says:

    The advantage of hiring an insider is that he already understands the lay of the land and has a feeling for the firm’s culture. So he can hit the ground running, whereas an outsider may take many months to get up to speed (I can sling bizworld cliches with the best of them). The disadvantages is that a newcomer is likely to see things with a fresh pair of eyes and bring some new perspective to the job. An insider is not so likely to question and change the traditional ways of doing things or indulge in any original thinking. In Nadella’s case, I don’t imagine he’s going to do anything of the kind. Maybe he’ll make a few changes of course (I gotta throw in one more cliche) but in general we’re going to see the same old stuff. With the traditional results.

  3. Joe S says:

    Two big problems with Microsoft’s products are poor design and poor execution. The Registry is one of the worst computer science ideas ever. The acceptance of good enough results has led Microsoft to a dead end. On the operating system side, Microsoft’s operating system failures, Longhorn, Vista, Windows 8, WinCE and so on imply a huge lack of fundamental thinking. The only innovation ever at Microsoft was bundling as disparate bunch of apps and selling them together in a bundle. At the rate things are going, it will be Windows nowhere, not Windows everywhere.

    Esthetics is an important, and at Microsoft missing, guide of a successful design. To quote a very insightful man, “Microsoft has no taste” and it shows.

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