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Nadella, Gates: Right Team For Microsoft?

Does the pairing of Nadella and Gates foretell Microsoft's return to glory or a new era of dysfunction? Take a closer look.

$1.2 million but could rake in up to $18 million in 2015, has a track record to back up calls for innovation.

Staten, whose research focuses on Microsoft's cloud efforts and who has met with Nadella periodically over the years, said the new CEO has relied heavily on data to make his case, such as when he faced an uphill battle rallying Microsoft's Server and Tools division around the cloud.

Nadella referenced these challenges last fall in an interview with ZDNet. He exhibited a willingness to challenge Ballmer and Gates, dismissing their tendencies to yell and scream as "melodrama."

"You come back at it with data," he said at the time, shortly after Ballmer announced his retirement intentions.

If dissenters resisted this analytical approach, Nadella made clear that "he was not going to have them if they didn't get on board," Staten said. He added that he expects the new CEO to bring the same attitude to Microsoft's client group.

He said that Nadella, in a past conversation, characterized Windows 8 as an improperly hedged bet. With the watered-down desktop mode awkwardly tacked onto an unproven touch-first interface, the OS has failed to mobilize developers and partners rooted in the old paradigm.

Even today, nearly 15 months after Win 8's release and more than three months after the rollout of Windows 8.1, the Windows Store remains an afterthought for most developers, who continue to throw their weight behind iOS and Android. With cheap Android tablets gobbling up global market share and iPads still commanding 90% of enterprise tablet activations, why should app makers focus anywhere else?

Nadella now bears responsibility for that question. Reports indicate Microsoft is retreating from some of Windows 8's more hardline UI changes, but Staten predicted that Nadella will focus on showing the value of the tiled Modern, or Metro, interface.

"Up to this point, the unified message has been that cloud, SaaS, and Metro are the [future]," Staten said.

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Whatever Nadella's approach toward Windows, he's proved himself willing to second-guess his company's past moves. In November, for example, he told Fortune that the company was forced to play from behind in virtualization after "getting [its] ass kicked by VMware," and that "being captive to old category definitions is really a death sentence in this business." Nadella also said at the time that Microsoft was among the few players realistically vying to become a cloud mega-provider.

Ultimately, Gates is going to have an influence, quite possibly a positive one. Ballmer, who will soon become the company's top shareholder if Gates continues to sell off his stake, is still on the board and will retain some sway. Nadella's outlook as leader should be clearer by April, when the company will host its Build conference for developers in San Francisco. A development announcement of Windows 9 is possibly on the docket. But until then, the Nadella-Gates partnership warrants optimism.

"You can count on two hands the number of people who have managed something of [Microsoft's] size," said Staten of Nadella's new role. "Give him a little credit for running a multi-billion dollar business for the last 15 years."

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