The Microsoft CEO has set new goals, taken some decisive actions, moved ahead with works already in progress and made Wall Street happy
Satya Nadella has taken decisive steps since being named Microsoft CEO in February 2014 to solidify his leadership of the company and try to turn it in a new direction – toward fulfilling its new corporate credo: the productivity and platform company for the mobile-first and cloud-first world. He’s also reaped the benefit of projects that were in the queue before he took the helm. Here’s a look at Microsoft’s big focus areas and activities under Nadella so far.
1. Mobile first, cloud first
While it’s a little jarring to hear that two things are being put first, Nadella does a pretty fair job of explaining what he means by his new corporate credo. By making relevant applications available to mobile devices through cloud services, customers will be able to do useful work wherever they are and entertain themselves as well. This is accomplished, in Nadella’s vision, with a mix of support for all types of devices – phones, tablets, laptops, watches – and connecting them to cloud services such as Bing, Office 365, Azure and OneDrive.
Nadella says the new Microsoft is the “productivity and platform company for the mobile-first and cloud-first world.” While including the word “productivity,” Nadella leaves it undefined, other than to say it’s getting stuff done. He hints at what it is, saying Surface Pro 3 is the best productivity tablet, Office and some other apps are world-class productivity tools and that productivity relies on interrelated software platforms. But his bottom line is that Microsoft will reinvent productivity, so defining it is ongoing.
3. Office for iPad
This product was a long time coming, and started under Nadella’s predecessor. Office for iPad blends the functionality of Office with a user interface that makes it familiar to both those who use Office on Windows and to those iPad users familiar with the Apple user interface. The new version plus Office 365 makes iPads – which are already used in many BYOD settings – much more productive devices in the workplace. Its release marks a change in thinking by Microsoft – that it no longer makes sense to stand in the way of corporate use of iPads when they are irreversibly infiltrating enterprises.
4. Gates as advisor
As chairman of the board of Microsoft, Bill Gates’s legendary status could do nothing but overshadow Nadella, so it was a smart move to shift Gates out of chairmanship to a simple membership on the board. The master stroke was enlisting Gates to act as an advisor to Nadella on product development based on Gates sniffing around Microsoft R&D teams in search of gold. It clearly sets up Gates as reporting to Nadella, not pulling Nadella’s strings.
5. Ballmer out
While it’s not clear Nadella had anything to do with it, previous CEO Steve Ballmer has stepped down altogether from the board of Microsoft, saying he’s too busy doing other things in his retirement (like buying the LA Clippers basketball team). Regardless of why, it’s good for Nadella in that, like Gates, the presence of larger-than-life Ballmer could overshadow him. Ballmer is passionate about Microsoft and has shown himself to be a tough adversary, something Nadella doesn’t need. While Ballmer says he agrees with Nadella’s plans now, that could change. With no official standing, such disagreements will be less troublesome.
6. Azure advances
Microsoft has announced new Azure cloud services that make it easier for customers to create hybrid clouds for their businesses, back up data to the cloud and provide failover in the cloud if corporate networks fail. Nadella can take credit for this since Azure was his baby before he took over the company. Azure seems to be making slow gains against Amazon Web Services, which is the most widely used cloud provider. Gartner places just two cloud providers in its leadership quadrant – AWS and Azure.
7. Office 365
Office 365, the cloud version of the franchise productivity suite, is booming as a business. Nadella doesn’t get all the credit, but Office 365 may become even more attractive as Microsoft develops new features requiring vast computing resources that are available only via Office 365 and not via corporate-owned Office servers. Office 365 is a powerful tool for locking in students as potential life-long customers. Universities get to offer the service for free to students when they buy it for faculty and staff. Students can keep using it for a year after they graduate. Students can also buy their own four-year subscription for just $79.99.
While many critics say Microsoft should get out of the hardware business, Nadella has vowed that the company will stay in it. Even as reviews of its Surface Pro 3 tablet (hawked as a laptop replacement) are mixed, Nadella calls it the premiere productivity tablet. Even as analysts suggest dumping Windows Phone altogether, Nadella says he will press ahead with making phones through Microsoft’s purchase of Nokia. As some call Xbox a distraction from Microsoft’s main business mission, Nadella says, ”we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft.” So Microsoft remains in part former CEO Steve Ballmer’s “devices and services company.”
9. Management shake-up
Nadella reshuffled his top executives to make clear whom he trusts and to clear out some Ballmer appointees, perhaps as a symbolic gesture. Scott Guthrie became head of cloud and enterprise business, Stephen Elop (then yet to come aboard from Nokia) was put in charge of devices, Phil Spencer was given the reins of Xbox. Business development head Tony Bates and marketing chief Tami Reller have left the company.
Nadella is in the midst of figuring out who will make up the 18,000 employees to lose their jobs in a streamlining move, but most of them will be workers acquired when Microsoft’s purchase of Nokia finalized earlier this year. The company is also changing its policies toward contract workers, and 80,000 of them could be affected. In sum, Nadella is trying to give Microsoft a smaller headcount and the ability to move more rapidly to meet competition and respond to customer needs.
Nadella wrote a 3,100-word email to Microsoft employees calling on them to change. He says: “Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving.” That’s got all the earmarks of a big cultural shakeup.
12. Stock soars
Nadella’s actions have made Wall Street happy. Since he was appointed, Microsoft‘s stock price has risen from about $36 per share to about $45 – a level it hasn’t hit in more than 15 years. At least from an investor’s perspective, he’s doing something right.