Microsoft's Nadella: More Than Talk - InformationWeek

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7/26/2014
08:36 AM
Michael Endler
Michael Endler
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Microsoft's Nadella: More Than Talk

Microsoft CEO Satya Nadella proves he can be a man of action with the biggest layoff in company history and other concrete steps to reshape Microsoft. Now what?

Microsoft Office For iPad Vs. iWork Vs. Google
Microsoft Office For iPad Vs. iWork Vs. Google
(Click image for larger view and slideshow.)

They say talk is cheap, but that's not necessarily true if you're Microsoft CEO Satya Nadella. Microsoft stock is up more than 20% since he took over in February and has reached heights never attained under predecessor Steve Ballmer. Microsoft released lots of products during that period, but if you look at what people were really responding to -- at the things for which Nadella was responsible -- it was Nadella's language.

Now it's more than talk. With the announcement of 18,000 layoffs, Nadella has shifted into action. He's no longer reshaping, tweaking, and re-contextualizing what Steve Ballmer left behind, or making the sorts of moves that can remain invisible to outside observers. He's now begun remaking Microsoft according to his vision, and in so doing he's moved to a new stage of leadership, one where actions will increasingly speak louder than words.

It's a big step up from his early days as CEO. Nadella's been justly praised, but it's hard to know how much different Microsoft's product line would look if Ballmer were still in charge. On his way out, the former CEO reportedly gave the go-ahead on Office for iPad, for example, and one assumes Microsoft would have continued to beef up Azure under Ballmer, just as it has under Nadella. That's not to say Nadella hasn't exerted his authority. He reportedly axed the Surface Mini at the eleventh hour, and a lot of the cloud momentum Nadella's currently hyping stems from work he oversaw in earlier roles.

[Does Satya Nadella have Microsoft back on track? Read Microsoft Faces 4 Big Challenges.]

Still, almost everything Microsoft released during Nadella's early reign was already well into development under Ballmer. Nadella didn't bring new products; he brought new packaging for those products, new strategic sensibilities, and a new business vocabulary. His poetic delivery and hipster attire contrast sharply with Ballmer's salesmanship and bombast, a PR victory all by itself.

But by early July, Nadella's rhetoric had begun to grow repetitive. He'd been recycling key talking points to developers, partners, and other key constituencies as he wound his way through Microsoft conferences and events. A recent press tour engendered a lot of goodwill. But as his description of a cloud-driven world full of personalized digital experiences grew more familiar, the topics he wasn'taddressing became more obvious.

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella

Before the layoffs, Nadella appeared almost pre-emptive in his references to first-party smartphones and tablets, for example. They were normally limited to enthusiastic platitudes about the Pro 3, or vague intentions to integrate Nokia and build the Windows Phone market, with help from partners. He seemed to bring up devices, not only to assure audiences that Microsoft hadn't forgotten about its challenges, but also to stop the conversation before it started.

Layoffs seemed inevitable; Microsoft was already undergoing a restructuring effort when Ballmer stepped down, and in absorbing Nokia's device business Microsoft took in some skills overlap that had to be consolidated. But it did not seem inevitable that Nadella would enact the largest job reduction in company history. Even not counting the Nokia layoffs, 5,500 other job cuts -- which included changes to the Windows team and its testing process -- constitute Microsoft's second-biggest layoff ever. It's not clear if these efforts to make

 

Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio
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Charlie Babcock
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Charlie Babcock,
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7/28/2014 | 5:44:52 PM
Microsoft is now a server company
Although Microsoft still aspires to be a device company, I think it's inevitable that its future lies as a server company. it's last successful business device was the Windows PC. Which means that it's now a server company, both Windows Server in the enterprise and the Azure Cloud, delivering services to other people's smart phones and mobile devices. 
Lorna Garey
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Lorna Garey,
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7/28/2014 | 3:02:29 PM
Re: Let's be a little more serious about the word 'action.'
So to distill your message, you're positing that Nadella's grand plan is to lay off large numbers of Microsoft's US citizen tech workers, replace a significant number of those people with (presumably) less expensive Indian tech workers, then bail out of the company?
Shane M. O'Neill
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Shane M. O'Neill,
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7/28/2014 | 1:20:10 PM
Re: Let's be a little more serious about the word 'action.'
@Lawler It's hard to think of Nadella as an enforcer hired by the board to fire thousands of people and then parachute out. Companies usually bring in an outsider for that kind of grim business. Nadella seems emotionallly invested in the complex task of streamlining Microsoft for the long haul. He doesn't fit the profile of a hatchet man.
Lorna Garey
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Lorna Garey,
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7/28/2014 | 12:29:34 PM
AD integration
Michael, In terms of "It did not make sense to add a wholly unproven product category -- devices -- as a would-be strategic cornerstone." That's debatable -- I have heard that Microsoft is extending AD with things like federation and hybrid cloud integrations, which is smart for keeping enterprise IT on board with its own hardware and Windows. Identity and directory management are an important trump card. 
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