Five Ways Satya Nadella Has Changed Microsoft

by Sohini Bagchi    Feb 03, 2016

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Picture this. In February 2014, when Satya Nadella took over from Steve Ballmer to head Microsoft Corp, the company was losing steam, its products like Windows 8 had been a disaster, the employees were engaged in a constant battle for supremacy. Stakeholders - from partners to consumers and developers were somewhat losing faith on the company. Analysts and enthusiasts were also looking for a change. They wanted to see a refreshed Microsoft in the subsequent months.

Two years later, in February 2016, when we ask the question, which CEOs have changed the way a company functions, the first name that comes to mind is Microsoft’s Satya Nadella. Nadella will soon complete two years of heading Microsoft Corp.

Unlike former CEO Steve Ballmer, who believed, “If you want to use Microsoft you have to buy everything from us,” Nadella changed the company’s attention to cloud-based software platform, making its products and services available to all, bringing a more informal culture within the company and making some key shifts in the company which investors seem to applaud. We bring out some areas where Nadella has changed Microsoft in the last two years.

#1. ‘Consumers first’ approach

For years, Microsoft believed it has its supremacy over others and didn’t bother to change with the market transitions. It refused to acknowledge that devices like the iPhone and Nexus were actually focused on ‘customers’. Nadella, a smart tycoon, realized customers use products only when they love them just like they did to Apple’s iOS or Android devices. Hence, Nadella changed Microsoft to a strong user-focused company with the changes in Windows 10 showcasing a renewed focus on the user and on the PC OEMs that support much of Microsoft’s remaining desktop power.

Nadella said, it now wants to serve consumers irrespective of what device they use. It wants people to use its mail service not only on a Windows computer but also on an iPhone. This is a huge change from the days of Steve Ballmer, who tried to use popular products like Microsoft Office to save Windows by keeping them separate.

#2. The hip and cool kid

Microsoft is back to being the hip and cool kid, thanks to Satya Nadella. Analysts often said that Steve Ballmer had an imposing presence, despite being a true professional, having boundless energy. But Nadella had a different image. Instead of being all clad in a suit, he wore a pair of jeans, hooded jacket and a monk-like smile - all that Microsoft needed to become the nimble, focused company that responds quickly to customers and carrying out new innovations. 

“In an industry dominated by people like Mark Zuckerbeg, Tim Cook and Larry Page, Microsoft needed a CEO who looks and acts cool and Nadella fits the bill, believe experts,” said tech analyst Gaurav Kumar.

At the same time, as the company works to reinvent its image. Its press conferences are more informal and interactive with more jokes. The senior executives now come across cool, funky people trying to shape future, believe analysts. 

Read more: Satya Nadella To Deliver A Keynote At ‘Microsoft’s Future Unleashed’ Mumbai  

#3. Playing well with rivals

Nadella believes that cooperation and not confrontation is the way to go in today’s business scenario. Ballmer’s distaste for cooperation with Apple and Google proved to be a wrong strategy by the company which garnered less than 5% of the mobile market. Nadella is a visionary. He had released Office for the iPad and Android devices, as well as a free Outlook app for both rival platforms in his first year in office.

Nadella ended long-running feuds with once-bitter rival Salesforce.com, also forging partnerships with them. As part of Microsoft’s Cloud Storage Partner Program, users of Apple iOS devices can fire up Word, Excel or PowerPoint and pull in documents and data from other cloud providers. This would mean users of non-Microsoft devices can access data stored by Microsoft competitors and edit and save within Microsoft apps. Box Chief Executive Officer Aaron Levie, who spent years criticizing Microsoft’s closed approach and lack of innovation, is now openly championing the software giant.

“What Microsoft has been doing under Satya’s leadership is recognizing that to be incredibly relevant in the next generation of enterprise and consumer, they need to make sure their individual products are able to stand on their own and compete on their own without being propped up by the complete integration of them all,” Levie said in an interview on CNBC. 

#4. ‘It’s an open world’

Where Ballmer called the Linux open-source operating system a “malignant cancer,” and Bill Gates snubbed open source, Nadella proclaims, “Microsoft loves Linux.” As noted tech editor Ivor Soans noted in a First 

He announced that Microsoft supports a variety of open source software applications on its cloud and that 25 percent of Microsoft’s Azure cloud is already Linux along with CentOS, Oracle Linux, Suse, and Ubuntu. Nadella clarified that Microsoft needs to develop its own platform while playing well with others. 

Now, Microsoft has open sourced the artificial intelligence framework it uses to power speech recognition in its Cortana digital assistant and Skype Translate applications. The framework is called, Computational Network Toolkit (CNTK), and can help machines do things like understand speech and determine logical connections between photos. Developers are likely to leverage it to advance deep learning networks.

#5. Research matters (for future)

Following the footsteps of Google and Facebook, Nadella’s Microsoft is strengthening its research team to remain relevant and futuristic. While Bill Gates started Microsoft’s research arm in 1991, the division, aptly named Microsoft Research, didn’t interact with the company’s commercial product staff, something that led to missed opportunities.

For example, the research arm pioneered digital mapping in 1998, but no one thought to commercialize it until 2005, when Google Maps was launched. Now, Nadella is using its expertise to boost the company’s product teams for the first time.

The team (which Nadella has realigned) is now working on products like Azure, Skype, and Office, according to Bloomberg report, which added, The new, commercially-oriented research unit is called MSR NeXT, and it’s working on some futuristic projects.

Read more: Nadella Inspires “Data Culture” At Microsoft

Overall, Microsoft’s financials have gone well. In the recent quarter, Microsoft had $25.69 billion in revenue and 78 cents a share in earnings, better than the average forecast of analysts surveyed by Thomson Reuters of 71 cents a share in earnings and $25.26 billion in revenue.

“Currently, businesses favor Microsoft because it offers more flexibility in terms of moving software around, say from a company’s own data center to the one it has outsourced to Azure,” said Frank Gillett, an analyst at Forrester Research.

The future is bright for Microsoft and we continue to view the company as an attractive investment, stated Michael Berger, Founder and President, Technical420.com. He mentioned in an article in Moneyshow.com, “Going forward, we expect to see Microsoft  to report better than expected earnings in the March and June quarters now that the headwinds associated with the move from XP to Windows 7 are behind them.”

As cloud services rapidly expand, Nadella will have to demonstrate that its products are equal to, or better than, those of its competitors in both quality and price.