July 11, 2014
Microsoft’s New CEO Refocuses Company On Productivity, Platform
Peter Suciu for redOrbit.com - Your Universe Online
Microsoft named Satya Nadella the company's chief executive officer and a member of the board of directors back in February. Since he took the reins of the technology giant it was clear that he would likely take the company in a very different direction than his predecessor Steve Ballmer.
Ballmer's vision was reportedly to chase Apple's business model, and declared that Microsoft would be a "devices and services" company. It is now evident that Ballmer's vision for the company is in the rearview mirror as Nadella made it clear he sees a very different road ahead for Microsoft. On Wednesday Nadella send out a massive email to Microsoft's employees that reaffirmed the new direction the company would be taking.
"Nothing is off the table in how we think about shifting our culture ... Organizations will change," Nadella's email read, as reported by Business Insider. "Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. 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."
Nadella summed up where the road will take Microsoft and essentially, "We help people get stuff done."
With that the days of devices and services are over, and instead Nadella suggested, "At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more."
While this sounds like a major paradigm shift for the company, in fact it could be the return to the days of Bill Gates, at least as Microsoft moves away from devices and services and refocuses on productivity and platform. It is also much more than just fancy wordplay.
"This is very similar to what Bill Gates did with .net without the .net part," said Rob Enderle, principal analyst at the Enderle Group. "What Nadella is doing is restoring the company to its youth, while looking to its future instead of its past. This is also a refocus on its customers, which is what Microsoft has always been good at. The rest of this is that everyone is going to be mobile and pulling app off the cloud."
Nadella is also playing to his strengths, which is why he is the person running the show and plotting the company's course.
"He came from the cloud space that is what he likes the most," Enderle told redOrbit. "He was picked because of this and to bring his background to the guide the company. This is very Consistent with what the boards wants to get the company back on track."
This may not be easy, especially as Reuters noted since absorbing the handset business of Nokia this spring Microsoft now has 127,000 employees – far more than rivals Apple or Google – and as noted by the purchase many whom are now engaged very much in the devices business. Reuters added that Wall Street insiders are already expecting Nadella to make some cuts, and this could represent Microsoft's first major layoffs since 2009.
"With recent chatter on the Street about potential head count reductions at Microsoft it was important for Nadella to be visible and set an optimistic tone heading into the next few months, especially on the heels of the Nokia integration," Daniel Ives, an analyst at FBR Capital Markets, told Reuters.
However, while this could mean a sleeker Microsoft it would also play to how tech companies have had to turn things around.
"To this end Nadella may be looking to the Steve Jobs playbook, and better make the company work around his own set of skills," said Enderle. "Nadella is now re-crafting Microsoft to fit his skill set, which is what he was hired to do."
Some of the problems Microsoft is now facing could be laid at the feet of Steve Ballmer, but Enderle said that isn't quite the fairest assessment of the situation.
"The problem that Steve Ballmer had is that he spent most of his time trying to run Bill Gates' Microsoft. Ballmer tried to change at the end but it was too late. He had a disadvantage of trying to run the company as it had been run, but in the end he simply wasn't Bill Gates."
Now Nadella has the benefit of learning from Ballmer's missteps.
"That is critical to any CEO that you have to rebuild the company against your skill set. Otherwise you are a fish of water," added Enderle. "Nadalla was hired to make it his own, and we're already seeing that in progress."
Wall Street apparently agreed that this could be the right direction. On Thursday Microsoft shares rose slightly higher to $41.90 on NASDAQ. Microsoft's shares are also up 12 percent year to date on the renewed confidence in the company under Nadella's leadership, and the stock hit a 14-year high last month. That is the highest since the tech-stock bubble of 2000, Reuters reported.