NEW DELHI: Over five months after Steve Ballmer announced that he would step down, Microsoft named India-born Satya Nadella its new CEO on Tuesday. In an accompanying move, the company also announced that its charismatic founder Bill Gates would step down from his ceremonial post of board chairman to “devote more time to the company” and to support “Nadella in shaping technology and product direction.”
This is particularly interesting because with this move, Microsoft is not only trying to empower Nadella to carry out his vision – he has the backing of Gates – but is also trying to assuage fears over his lack of experience in consumer space. The idea seems to be that Nadella will take care of the enterprise side of the business, which makes money for Microsoft, while Gates can pitch in with inputs on consumer-related products like the Windows Phone where Microsoft is faltering.
Though Nadella was discussed as possible CEO of Microsoft since Ballmer’s announcement to retire, rumours were that Microsoft was looking for an external candidate and not internal because it wanted a fresh approach to its business. But in the end it turned out that Microsoft board decided to play it safe and handed the reins of the company to a man who has been with the software giant for last 22 years and who knows the company inside out. Nadella is also familiar with the company’s cloud and enterprise business – he was head of cloud and enterprise group – which is a key revenue area for Microsoft.
“Microsoft is one of those rare companies to have truly revolutionized the world through technology, and I couldn’t be more honored to have been chosen to lead the company,” said Nadella. “The opportunity ahead for Microsoft is vast, but to seize it, we must focus clearly, move faster and continue to transform. A big part of my job is to accelerate our ability to bring innovative products to our customers more quickly.”
“During this time of transformation, there is no better person to lead Microsoft than Satya Nadella,” said Bill Gates, Microsoft’s founder and member of the board of directors. “Satya is a proven leader with hardcore engineering skills, business vision and the ability to bring people together. His vision for how technology will be used and experienced around the world is exactly what Microsoft needs as the company enters its next chapter of expanded product innovation and growth.”
“Having worked with him for more than 20 years, I know that Satya is the right leader at the right time for Microsoft,” said Ballmer.
Nadella was earlier heading the company’s cloud and enterprise business. While in his earlier responsibility he looked after a division that had $19 billion annual revenue, the post of Microsoft
CEO is a big step up for him. The company generates around $78 billion revenue in a year and is currently facing a number of challenges in the market where Apple and Google have emerged as more exciting and innovative technology companies.
Nadella completed his engineering degree from Manipal University before heading to the US for higher studies. He joined Microsoft in 1992.
The new chairman at Microsoft will be John Thompson, who led the search for the new CEO.
The reaction to Nadella as Microsoft CEO has been mixed so far. Investors at Nasdaq gave a thumbs up to Nadella. Hours after the Microsoft announcement, company shares were trading at a price that was marginally up. While the jump was not significant the fact that investors were not dumping shares in wake of the announcement can be taken as a positive sign for Nadella.
In its early report on Nadella’s appointment, Forrester Research, which is usually bullish on Microsoft, took a cautionary approach. Introducing the report titled The 10 Questions New Microsoft CEO Satya Nadella Must Address, it said, “Nadella inherits a company fighting to reinvent itself in the age of the customer. Microsoft’s all-important enterprise customers see that the company is making progress on this transition — but big gaps remain in mobile computing and enterprise applications.”
While Nadella’s master plan for Microsoft remains unknown, in his letter to employees he hinted at the direction he intends to take. “Our industry does not respect tradition — it only respects innovation. This is a critical time for the industry and for Microsoft. Make no mistake, we are headed for greater places — as technology evolves and we evolve with and ahead of it. Our job is to ensure that Microsoft thrives in a mobile and cloud-first world,” he said.
The cloud computing is an area where Microsoft is competitive due to its Azure platform, which has become quite popular with enterprise customers. But mobile remains an area of concern.
Vishal Tripathi, a principle analyst with Gartner India who has watched Microsoft for the last seven years, believe that company has no option but to fight it out in both enterprise and customers. “In the coming days, boundaries between enterprise and consumer space are going to be blurred,” he said.
This is the same theme that finds mention in Nadella’s letter.
“I believe over the next decade computing will become even more ubiquitous and intelligence will become ambient. The co-evolution of software and new hardware form factors will intermediate and digitize — many of the things we do and experience in business, life and our world. This will be made possible by an ever-growing network of connected devices, incredible computing capacity from the cloud, insights from big data, and intelligence from machine learning,” he wrote, hinting that Microsoft wants to see itself not just as an enterprise firm but as a technology company at the centre of next-generation computing environment.