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Satya Nadella faces reinvention challenge at Microsoft

business Updated: Feb 06, 2014 15:25 IST
Yashwant Raj and N.Madhavan
Satya Nadella

Software used to be a product on desktops. It is now increasingly a service you rent on the Internet – or the cloud.

Satya Nadella, Microsoft’s new Hyderabad-born CEO has to address this tectonic shift that takes away from his company’s PC era monopoly. His appointment brings back technology focus from the marketing-oriented Steve Ballmer, who led the company for 13 years.

“I am glad they picked an engineer,” said a former high-level Microsoft executive, who asked not to be identified. “They badly need a good product.”

Revenues from the ubiquitous Windows platforms is down roughly 30% since 2010. The MS Office product is growing at stagnant rates. Giants like IBM and Amazon lead “cloud” services in which Microsoft is a latecomer. Google search is leap years ahead of Microsoft’s Bing.

A shaky marriage with Nokia to sell Windows mobile devices – up against Apple and Google Android-led Samsung, and a lacklustre start to Surface, its tablet PC, add to the woes. In gaming the Xbox is up against the mighty Sony.

Nadella, luckily for the company, has a solid grounding in cloud computing, which is where the future is. But he also has to think of various divisions. Tongues are wagging about a company break-up.

“He needs to start from scratch and think about what the company should be,” wrote Marc Andreessen, co-founder to the Netscape browser .

As Bob Darrow wrote on industry site GigaOm, “the company is trying to navigate a tricky transition from its client-server cash cows — Office and Windows — to a cloudier SaaS (software as a service) model.”

It might help Nadella that Microsoft is sitting on $83 billion (Rs 5.2 lakh crore) in cash.