A lot of people who know relatively little about Microsoft are commenting about new CEO Satya Nadella, and I’ll gladly join that list.
Nadella comes from Microsoft’s enterprise and cloud services division, which suggests that these are likely to become Microsoft’s focal areas going forward. I’ve seen two main opinions on this:
- This is a bad move, since Microsoft needs a consumer- and mobile-product visionary. They should try to turn around the areas that they’re not doing well in.
- This is a good move, since Microsoft is doing pretty well at enterprise software and cloud services. They should further develop what they’re already good at.
In the former case, Microsoft tries to be more like Apple and Google. They try (again) to break into the mobile and tablet markets successfully.
But Microsoft is terrible at being like Apple and Google. They’ve tried. They’re still trying, in some areas. And for the most part, it’s been a series of embarrassments and huge financial losses.
It’s too late for Microsoft to meaningfully break into the mobile space. If there was any chance of their products making it big there, we’d already be seeing strong growth. Successful mobile platforms don’t grow slowly and quietly.
But it’s just not happening for them, and it’s too late to try again. That ship has sailed. The market has been taken, and the juggernauts of Android and iOS are now deeply entrenched. There won’t be room for a strong third player for many years — probably a decade or more.
If the consumer-product-visionary strategy was going to work, its time has long passed.
With the enterprise-and-cloud strategy, Microsoft becomes more like IBM. They don’t need to kill off Windows — on the contrary, their enterprise business depends on the continued ubiquity of cheap Windows PCs — but they don’t need to try to shove Windows into the phone and consumer-tablet markets anymore at the expense of its suitability to boring office PCs (which they did, quite destructively, with Windows 8).
Instead of desperately trying (and failing) to be cool, hip, and “innovative” to consumers — a long-running flaw of Bill Gates, not just Steve Ballmer — Microsoft embraces and accepts its boringness, using it to their advantage.
Windows and Office don’t need to change much over time. Even today, nobody wants them to (except Microsoft). Just put out new versions every few years with minor improvements, a handful of new features, and slight facelifts. No more radical changes, ever. Give the customers what they want: the same Windows and Office, but a bit better.
PC sales growth is down, but I don’t think the market is going to meaningfully contract for a long time, if ever. Tablets aren’t replacing PCs for most people. And no matter how well Apple does with the Mac, they’re always going to leave huge gaps in the market for Windows PCs to fill.
Microsoft can keep being Microsoft, they’ll keep making tons of money, and we can continue to mostly ignore them. (Quick, name anything IBM has done in the last 10 years.) As their enterprise business is churning away, they can continue to build up their cloud-services business into a large-scale AWS competitor.
Appointing Nadella as CEO shows promise for this theory, and I think it’s their best move.