Microsoft Makes Up Its Mind: Nadella In, Gates Steps Down as Chairman
Bill Quick

Microsoft’s New Director Plans to Seek Windows-Sales Redo – Bloomberg

ValueAct Holdings LP President Mason Morfit, the investor set to join Microsoft Corp. (MSFT)’s board as it
prepares to make Satya Nadella chief executive officer, will
seek another break with tradition: how the company sells its
flagship products.

Morfit, 38, and ValueAct want the world’s largest software
maker to reduce its focus on Windows, the operating system that
underlies most of the company’s offerings, according to people
familiar with the matter who asked not to be identified because
the information is private. For two decades, Microsoft has
focused on selling applications and server software designed to
work specifically for Windows.

Now ValueAct wants Microsoft to accelerate efforts to
unchain products and services from Windows so that they can be
more widely adopted on smartphones and tablets. Microsoft
programs like Office, which typically run on Windows, could then
also be used on Apple Inc. (AAPL) and Samsung Electronics Co. gadgets
that have other operating systems, the people said. The moves
are intended to reinvigorate growth at a company that’s
struggled to adapt to the rise of mobile devices, away from the
shrinking personal computing arena.

Morfit also wants to emphasize enterprise and cloud
businesses and push Microsoft to look at jettisoning or scaling
back hardware and consumer products such as the Xbox game
console, which carry expensive marketing and manufacturing
costs, the people said.

I’m going to hazard a guess that if M$ trashes its consumer business, it won’t have much of an enterprise presence ten years down the road, either.

Consumers are also workers.  Microsoft is so strong in enterprise because the vast majority of consumers use Windows and the gazillions of apps already existent for it in their daily lives away from work.

Apple is making inroads in enterprise because consumers who use it at home want to use it at work as well.  That’s how Microsoft eventually achieved its enterprise dominance over CPM, OS2, and other competitors.

There are other ways to grow your mobile footprint besides destroying your consumer base.  But doing that is probably a good way to make a quick buck for vultures like ValueAct.

Microsoft Board Names Satya Nadella as CEO – Seeking Alpha

Microsoft also announced that Bill Gates, previously Chairman of the Board of Directors, will assume a new role on the Board as Founder and Technology Advisor, and will devote more time to the company, supporting Nadella in shaping technology and product direction. John Thompson, lead independent director for the Board of Directors, will assume the role of Chairman of the Board of Directors and remain an independent director on the Board. 

I find this heartening.  This isn’t a coup of the sort that ousted Steve Jobs from his own company.  Gates no longer has the desire to be the sort of day-to-day manager involved in acting as Microsoft’s CEO, but his technical skills and passion are probably still intact.  This arrangement removes Gates from direct supervision of Nadella, but still gives him a critical role in the company he founded, and direct input into Nadella’s own vision.

Also, while there were rumors that Ballmer would be ousted from M$’s board, he is keeping that position.  I suspect that a lot of those rumors came from old enemies within (and without) the company.  I consider that a good thing, too.  Whatever you think of Ballmer (and I fault him for his massive failure to capitalize on mobile) he made an enormous amount of money for a lot of people, including M$ itself.  And he was the guy who gave Nadella a relatively free rein in the first place.

This is not to say it’s all clear sailing for M$.  It continues to struggle in mobile, and integrating its various products and services to best take advantage of the ever-accelerating technological singularity will be massive challenges for it.  It desperately needs to rebuild its developer base as well – and I don’t know what Nadella’s skill set might be in this area.  Since his background is engineering, where Ballmer’s was sales, maybe he’s well-suited to do this as well.

And don’t count out Bill Gates.  If he really does begin to take more of a direct interest in the tech aspects of Microsoft again, well:  M$ has nobody else who’s ever created and built a tech company as big as Microsoft, does it?

That’s not to be sneered at.

I’d be interested to see what the other techies here think of all this, especially Billy Hollis, who maybe could address the developer issues.  Or anything else, for that matter.

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Bill Quick

About Bill Quick

I am a small-l libertarian. My primary concern is to increase individual liberty as much as possible in the face of statist efforts to restrict it from both the right and the left. If I had to sum up my beliefs as concisely as possible, I would say, "Stay out of my wallet and my bedroom," "your liberty stops at my nose," and "don't tread on me." I will believe that things are taking a turn for the better in America when married gays are able to, and do, maintain large arsenals of automatic weapons, and tax collectors are, and do, not.

Comments

Microsoft Makes Up Its Mind: Nadella In, Gates Steps Down as Chairman — 2 Comments

  1. Among those already at Microsoft, I think Nadella is the best choice.

    I thought, though, that they would pick someone from the outside to supply some new vision. Microsoft is desperately in need of vision at the top.

    Nadella’s division has arguably been the most innovative and visionary in the past few years, and that may be why he was chosen – he represents a balance between strong vision and strong connections to Microsoft’s culture and products. Sinofsky’s Windows Division and the Office Division make a lot of money, but no one in them has shown any similar vision or innovation.

    Taking an insider, especially one so closely tied to Microsoft’s existing corporate business, suggests that Microsoft will indeed do some refocusing back to core businesses. Good thing, because while they’ve continued to make money the last few years, I think that’s mostly on inertia. There is deep, deep distrust among developers and in the wider business user community. Lots of developers are, for the first time in their careers, looking at developing expertise that isn’t focused on Microsoft platforms. A small wave already has done so.

    When that happens, bringing a developer back into the fold is really hard. It’s emotionally similar to a personal relationship in which the other person did something to betray trust. Once that happens, the same level of trust is difficult or impossible to re-establish.

    We will see just how hard Nadella tries to repair the damage. Just returning to a “you know I love you, babe” stance isn’t enough. Nadella’s division has its own miscues in developer relations – some of the initial stuff in Azure was so toxic to developers that lots of them put off getting involved with Azure until it was changed. That suggests a regrettable tendency to take developers for granted, and while that would have worked three years ago, it won’t work nearly as well now.

    That problem is more critical to solve than most financial analysts realize. Take the problems around adoption of Windows 8. Microsoft (well, Sinofsky) forgot that people don’t buy operating systems. They buy things that solve their problems or make their lives easier, and for the most part, that’s applications. That’s true of both businesses and consumers.

    So where do the applications come from? Developers. Microsoft’s hole card, which allowed it to ride through the Vista wave, for example, is a huge and strong developer ecosystem. Let that decay, and their margin for error is much smaller.

    Microsoft (Sinofsky) went out of their way to piss off the existing Microsoft developer base in the design and rollout of Windows 8. Sinofsky was enamored of the idea of bringing in a ton of younger developers who didn’t do Microsoft and were HTML focused. So he created this neither-fish-nor-fowl thing in which HTML was coupled with a bastardized version of Javascript called WinJS to write native applications for Windows.

    This had plenty of disadvantages. HTML was never designed for the kind of user experience needed for a native platform. The supposed advantage of using an open standard was obliterated by the fact that WinJS was proprietary. The only remaining theoretical advantage was that existing web developers would be able to quickly adapt to writing apps for Windows 8. However, this assumed that those web-oriented guys would be excited about writing such apps, and the actual experience since Windows 8 was released showed that to be a forlorn hope. Windows 8 included a crippled version of the native XAML markup as a sop to existing developers, and Microsoft downplayed it from the beginning, but it is used 4 to 1 over HTML for Windows Store apps.

    Nadella is unlikely to make those kinds of mistakes. He understands the developer culture in a way neither Ballmer nor Sinofsky ever did. So I’m waiting to see what he does to re-invigorate Microsoft’s developer ecosystem. That’s key to maintaining the business revenue – most businesses of any size need customized software. But it’s important as a pool for creating consumer-based apps too. Without better apps, Windows 8+ isn’t likely to do much better in the consumer/tablet space than it is now.

    The other key area in which he needs to improve Microsoft is to inject more design thinking. Microsoft really, really sucks there, throughout the whole organization. See Dale’s latest car review for an example – he eviscerates Microsoft Sync’s design. But that’s a topic for another longer article I’ve been working on.

  2. The other key area in which he needs to improve Microsoft is to inject more design thinking. Microsoft really, really sucks there, throughout the whole organization.

    This.

    I can’t tell you how often I’ve noticed the same thing. In fact, I wonder if today’s mobile landscape might not look considerably different if the first Microsoft tablet, the ill-fated Tablet PC, had paid a bit more attention to design issues. And you aready know how I feel about the problems with the Surface.

    Gotta say I do like the Windows Phones, though.

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