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What Satya Nadella As Microsoft’s New CEO Means For The Company

Posted on February 9, 2014 in Business and Economy

By Pradyut Hande:

The appointment of the widely respected, unassuming in-house “technologist” in Satya Nadella as Microsoft Inc’s new CEO comes at a time when The Redmond, USA based tech giant, struggles to compete on an even footing in an increasingly competitive industry. In what was a predictable turn of events, Steve Ballmer’s 15 year reign came to a denouement with Nadella succeeding him as Microsoft’s third CEO in its 39 year history. Will this change of guard work in the sluggish company’s favour?

For starters, Nadella’s appointment certainly marks a discernible change in Microsoft’s leadership strategy. The marketing genius of Steve Ballmer – a catalyst responsible for much of the company’s early success – will now be replaced by the calm and collected Nadella’s technical brilliance at the top. This may be a harbinger of a plausible return to its halcyon days of breakthrough innovation that set the pace almost two decades ago. With the company having fallen behind newer rivals, Microsoft can ill afford to cede more ground if it is to create an enduring competitive advantage. Having burnt its fingers with the spectacular failure of its Windows 8 Operating System, coupled with the moderate success of its Surface tablets and other associated applications; Microsoft has now bet its future along a new track; and this is where Satya Nadella’s experience and expertise may become a critical factor.

Rapidly morphing consumer sensibilities and shortening product life cycles in an industry that swears by innovation and turns its back at obsolescence, have necessitated Microsoft’s shift in focus from licensed software to mobile telephony, cloud computing and allied services. The fact that Nadella has spearheaded most of Microsoft’s cloud computing and enterprise solution businesses lends itself well to its new strategic course of action. Whether this present gamble pays off in the future remains to be seen. However, having a concrete vision in place is at least a step in the right direction.

Another area of concern is Microsoft’s ambivalence with regards to its mobile handset business. The acquisition of Nokia’s handset business last year had fuelled hopes of an aggressive attempt at countering the growing influence of the likes of Google, Facebook and Apple Inc. to a certain extent. The challenge now is to complement sound hardware manufacturing capabilities with a rugged and yet fluid software framework. All this requires the investment and allocation of significant monetary and non-monetary resources. Nadella’s job will be to strike a balance between stabilising precarious businesses whilst ramping up support to high performing SBUs such as the Xbox and cloud computing divisions.

There are many who believe that a change in leadership at this critical juncture may just breathe new life into an increasingly monolithic organisation that has struggled to remain nimble and responsive to change. Steve Ballmer’s outright, overbearing and outgoing style may have propelled Microsoft to one time Silicon Valley greatness, but it certainly isn’t what “the Engineer ordered“; as the company negotiates a critical bend in the “technology road“. Perhaps Satya Nadella is exactly who Microsoft needs…or perhaps not. Only time will tell.

One thing is for sure though. The new CEO certainly means business and this could be ascertained when he prudently said, “Our industry does not reward tradition. It rewards innovation.” Brace yourselves, for a Microsoft storm may just be coming!