Ctrl-Alt-Nadella

Can new Microsoft CEO Satya Nadella “reboot” the company?

Author: Nastya Prazdnichnaya

On February 4, Microsoft announced the name of its third CEO in the company's 38-year history: Satya Nadella, a former cloud services executive and vice president of the corporation. Tom Warren from The Verge figured out why Nadella is so interesting and what he can bring to Microsoft. TJournal publishes a translation of this material.

Following Bill Gates and Steve Ballmer, Nadella will have to take on the courage to run a company that includes 16 different businesses with a multi-billion dollar turnover and will soon employ 130,000 people thanks to the acquisition of Nokia. And this is not just a difficult task, for Nadella it is also a matter of strategy and focus. But he won't be alone: ​​Microsoft co-founder and former CEO Bill Gates has been "promoted" to work with Nadella as a "technology consultant." His role will be to work on future products with various Microsoft business groups. Gates' departure as chairman surprised many, but it means Microsoft's founding father will spend much more time at the company. It's a historic day for the software giant and its employee empire, but what does the Nadella-Gates tandem mean for Microsoft?

Even though Nadella has been at Microsoft for 22 years, he's spent much of that time working on products that don't often make the headlines. So for those not familiar with the company inside, he wasn't the most obvious candidate, but insiders were, who saw how he helped focus Microsoft's server business on cloud solutions that are becoming increasingly important to entrepreneurs. In an unusual " internal CEO interview, " Nadella laid out the core of his strategy for Microsoft: mobile and cloud first. “Everything is becoming digital and software-based,” Nadella says.

Mobile first, cloud first - that's Nadella's new strategy

If this strategy sounds completely different from Ballmer's vision of Microsoft as a "devices and services" company, that's because it is. Nadella repeated “mobile first, cloud first” over and over again in his address to demonstrate his intentions as CEO. This hardly means that Xbox and Surface will be abandoned in the future, but it is clear that Nadella views cloud and mobile capabilities as his top priority.

To emphasize this once again, Nadella's first letter to Microsoft employees does not mention Windows or Office - it is dedicated to new goals. “I would say this: the first thing I want to do and focus on is to ruthlessly remove any obstacles to our path to innovation,” Nadella says in his first video interview. “And then channel all that innovation into something that Microsoft is clearly capable of doing.”

This ruthlessness in moving Microsoft forward could work well with Bill Gates as Nadella's running mate. However, it is not yet clear how involved Gates will be in working on the products as a technology advisor. Before Gates quit his day job at Microsoft in 2008, his internal product comments were notorious. Meticulous attention to detail and demanding employees buried some products before they reached the market. It's common knowledge that Gates put the Courier tablet project on hold because he felt the tablet wouldn't be viable without an email client.

Nadella wants Gates to be his running mate

Gates has been focused on his charity work, and his "return" to Microsoft a third of the time is a big change from when he spent his days at the company's Redmond headquarters. As chairman, Gates was heavily involved in board decisions—but he was hardly immersed in product planning. Gates admits that Nadella asked him to "step up" and it's clear he supports the new CEO (at least publicly). Microsoft needs a gatekeeper who will say no to products that aren't ready yet, but Gates, after six years outside Microsoft, is hardly the best candidate for that role.

Microsoft's biggest challenge continues to be the rapid transition from traditional PC-based information technology to smartphones, tablets and even web applications. And while enterprise software is still in its early stages, the consumer market is flooded with smartphones and devices running software from rivals Google and Apple. In the enterprise segment, Microsoft remains the clear leader, with the majority of businesses around the world running Windows and Office every day. But the time will come when all enterprise services and applications will be completely accessible over the Internet, and Microsoft must not miss such a turning point again. And Nadella, by focusing on cloud solutions, apparently wants Microsoft to be well equipped for the inevitable attack on its still-emerging leadership in enterprise software.

One of Nadella's top priorities as CEO will be ensuring that work on Windows Phone continues while deciding whether to make its future software and services available on competing platforms, Android and iOS. The pending completion of the deal to buy Nokia's mobile business will add complications, but it is a vital moment for the fate of Windows Phone. Nokia was involved in supplying Windows Phone, and since Microsoft needs to be aggressive in its mobile policy (especially in terms of updating its own operating system as quickly as possible), it will have to be very careful about Nokia's transition.

Take Windows Phone seriously or stop altogether

Nadella’s role as CEO will be ultimately determined by the “ruthless” decisions he makes regarding platform issues. While Windows continues to dominate the enterprise and PC space, its success in the mobile segment is much more modest. Unless Gates is against such a decision, one can imagine that Microsoft will consider adapting Android in one way or another: either by allowing popular Android applications to run on its phones and tablets, or on a large scale by hosting its software on Android, or by creating its own fork Android, like Amazon does. It is absolutely clear that Android is becoming the mobile equivalent of Windows now, and Nadella appears to understand the realities and challenges facing Microsoft in this regard. Now we need to decide: either actively invest in Windows Phone, or stop working on it for another mobile direction.

Nadella needs to make even tougher choices regarding Office, as new platforms present new challenges.

The Microsoft Office team was slow to respond to the global move toward touchscreens, and their software today still runs on millions of Windows tablets in traditional desktop mode. Touch-optimized versions are coming to Windows soon, but it's still unclear whether Microsoft plans to create a full iPad app for Office. Android and iOS versions already exist, but they are completely basic and limited compared to the PC version. Refocusing the Office team on mobile and cloud solutions will be a key goal for Gates and Nadella in terms of further development of the office suite. Competitors have yet to create a perfect equivalent to Office on mobile, and Microsoft should definitely take advantage of this opportunity.

There is also Skype and Xbox. Microsoft positioned its gaming console as a gateway to the living room, an effect Gates always wanted to achieve. If Nadella is serious about Xbox and cloud solutions, he will have to hurry up with the cloud flow concept . Sony is already in beta testing its own service, and Microsoft is unlikely to want to miss its chance to make a name for itself as a cloud services provider in the gaming and entertainment space. And although Skype works on Xbox One, Microsoft has not yet made any major changes or updates to the service. The service was acquired in 2011, but now it has serious competitors in the form of WhatsApp, Google Hangouts, and Facebook Messenger. Skype has recently focused on the mobile space, but the lack of a full web version is a glaring omission. For a company that focuses on "mobile and cloud", Skype will definitely be an integral element.

Microsoft is still a software giant

On the surface, Nadella's "cloud and mobile first" strategy doesn't seem all that different from Ballmer's "devices and services" strategy, but it suggests deeper strategic changes. Nadella has an opportunity to take a fresh look at Microsoft's plans and, thanks to Gates, a chance to improve Microsoft's product offerings. If Nadella and Gates can produce software innovation in the mobile space, then Microsoft will be well positioned to continue creating services and software that other companies will use on their devices. Be that as it may in terms of hardware, in the field of software Microsoft still remains a giant. And for Nadella, this is obviously quite good.

This material is a translation of Tom Warren's original article “ Ctrl, Alt, Nadella: can Microsoft's new CEO reboot the software giant? " on The Verge.

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