Microsoft is getting some positive attention for the long-awaited announcement of its new chief executive, Satya Nadella. For one, the software giant has put together a great website explaining who the new boss is, where he comes from, his values and more. It’s one of the more fulsome CEO information packages put out by a company, which is a good move given that Nadella – a 22-year Microsoft veteran who spent the last little while running its cloud and enterprises division – is a relative unknown to the world at large.
Beyond the well-done PR, Nadella is also being praised in many corners for being the right man for the job at the right time. Wired evidently had no trouble finding former colleagues to say nice things about him, with the consensus being that he’s very Bill Gates-like: a technical genius who also happens to understand the business side of things.
Moreover, he may be just the calming presence the company needs to replace the boisterous Steve Ballmer, whose loud outbursts are stuff of legend. Nadella will also have a new chairman at his side – former Symantec CEO John Thompson, who takes over for the outgoing Gates – as he tries to make Microsoft relevant again.
That’s where things get tricky. Microsoft has big mountains to climb in just about all of its businesses. The bread-and-butter of the company – PC software – is in a free fall, having its worst year in 2013 since analysts started tracking the market. Some think last year may have been a bottoming out, but with the amazing continued growth of smartphones and tablets, there’s little doubt it’s a commoditized business that is already well past its best days.
The fact that mobile is killing PC is doubly troublesome for the Redmond giant because its efforts there have been largely futile. Although Windows has successfully taken over for BlackBerry as the number three smartphone brand in many countries, there is a really big drop-off after number two. The same goes for tablets – Microsoft is faced with the huge reality that the mobile world is an Apple and Android one.
Having a presence in phones and tablets is incredibly important for any company that wants to take part in the emergent internet of things, or the next stage of the information revolution. As observers have pointed out, Microsoft is nowhere in this area – at last month’s Consumer Electronics Show, it was very difficult to find any of the connected home or wearable gadgets with apps for Windows devices.
The company is also facing an uphill battle in Nadella’s area of expertise, cloud services. Analysts say Amazon is crushing it in this area, racking up more business than Microsoft, IBM, SAP and Salesforce combined. The problem for all those companies can be summed up by the simple question posed by one observer: “Has anyone ever gotten rich competing with Amazon?” The answer, of course, is no.
Microsoft also appears to have lost its edge in games, with the PlayStation 4 outselling its more expensive Xbox One and many techno-aficionados pronouncing Sony’s console as the more powerful of the two. Ballmer and company did much to sour gamers on its brand last year with an ill-advised plan to kill used games, a scheme they were forced to backtrack on because of the backlash.
Nadella is riding into the top job on a wave of kudos and optimism, but he clearly has his work cut out for him. Overcoming all of those challenges will take a feat of veritable superhuman ability. Microsoft will be lucky if he can solve just one of two of them.