View From Above

Feb 6 2014   10:07AM GMT

Microsoft CEO choice all about cloud

Ron Miller Ron Miller Profile: Ron Miller

Piggy Bank with dollar sign on it and PCs in sky to symbolize cloud computingThis week the mystery was solved and Microsoft finally revealed that the new CEO was none other than Satya Nadella, the former engineer and head of the cloud and enterprise group was the choice.

Notice that he came from a technical background and has some experience in the cloud. He’s not as many have pointed out, a sales guy like Ballmer and I don’t think it’s a coincidence he came from the cloud division.

That Microsoft chose a cloud guy is a smart move and shows they at least recognize that the market is shifting. This probably isn’t news to them and they have been preparing for it in the Ballmer era with Azure and Office 365, the purchase of Yammer and other moves, but Microsoft is at its core remains a desktop software and operating system company.

When you look at Microsoft’s most recent earnings report, it looks as though they’re doing just fine, thank you very much. The cloud properties are growing. Windows appears to be selling in fairly large numbers, but Windows phone hasn’t caught in the US, and while it has pockets of success in Europe, the overall worldwide numbers as reported by IDC have remained dismal sitting under 4 percent of worldwide share. Analysts are looking at around a million Surfaces sold. These are not huge numbers.

The future is not on the desktop, but those desktops that remain are very likely going to be in business as consumers move to tablets and smartphones for more and more of their computing. That means to compete in this changing world, Microsoft (and everyone else), needs to pay attention to cloud, mobile, social and data. Microsoft clearly understands this too.

The challenge for Nadella is not understanding the problem, but executing on a vision to take the company in a new direction, and that’s not exactly a simple matter. It involves taking a huge company with an entrenched culture and politics and making them all move as one toward a new vision.

It also involves turning a proverbial battle ship. This is a company that has been firmly focused on the Windows desktop for years. It has made a lot of money doing that, and while forward-thinking shareholders understand that dynamics change quickly in the technology industry, it’s not easy to shift a company’s focus from what’s highly successful to something else, even if it makes sense in the long run to do it.

The trouble is we live in a world of quarterly reports and short-term thinking and investors have a hard time playing the long game. Heck, there are probably many people inside of Microsoft who have a similar problem.

But just because they are still selling units of Windows today doesn’t mean that money spigot is going to stay wide open forever. As PC sales drop, it’s inevitable that the well is going to run dry sooner or later.

Nadella no doubt sees this, but getting his employees to move on could be the biggest challenge of all for the new cloud guy at the top of the heap.

(c) Can Stock Photo

8  Comments on this Post

 
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  • FTClark
    Desktop sales will drop. They may drop a lot in time but they are not going away. So don't try to strangle us as happened with Windows 8 and pretend we are suddenly a big tablet.
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  • Ron Miller
    No they're not but Microsoft can't live on the desktop for very much longer and that's the challenge Nadella faces. How do you transition the company to whatever is next while keeping users like you satisfied and it won't be easy.
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  • FTClark
    You know if don't come easy... :)
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  • Ron Miller
    Got to pay your dues if you want to sing the blues. :)
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  • FTClark
    With the money they are making, they aren't singing the blues but if they want it to keep flowing they got to pay their dues and work for it. I think they will. They have a spotty history of mistakes but they recover.
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  • Ron Miller
    I'm not so confident they can pull it off. They have to really completely transform and that's very difficult to do for a company that size. They are still making a lot of money but it will take some savvy leadership to guide them from what they were to what they will become, and it will be even more difficult with Gates hanging around.
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  • nidhiarora
    i totally agree... we live in a world of quarterly reports. As more and more computing moves to the tablet (and sadly, there, Android has a headstart. its not enterprise, but its secure enough and flexible as hell) , Windows will face a threat - not from desktop Open Source OS, but from Android.. if they had an Android version for desktop (and why not?) i have a feeling that will hit Windows rather much.
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  • Ron Miller
    Actually Android is well behind iOS in the tablet game both for consumers and business users, but I could see Chromebooks taking a bite out of the PC market. Google has also hinted at an Android PC, which I've also written about.  But whatever the pressure point happens to be, the desktop PC business will no longer be the center of our computing lives and that's where Microsoft has made its living and needs to adjust.
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