Microsoft CEO Satya Nadella has said he will rekindle engineering at the company.
On February 3 2014, Microsoft named Satya Nadella as the company's third CEO. He previously ran Microsoft’s cloud business.
The key question for businesses small and large is how Microsoft will evolve as an enterprise software company in the age of devices and service, laid out by former CEO Steve Ballmer.
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The company’s Windows 8.1 Professional operating system (OS) is starting to gain traction thanks, in part, to the introduction of Bay Trail, Intel’s latest Atom processor. This has enabled manufacturers to deliver enterprise-ready tablets, running the full version of Windows, at a price comparable to premium Apple and Samsung devices.
Speaking at a customer and partner webcast following his appointment, Nadella said he would spend a lot of time with customers, partners and investors. "Being in touch with both perceptions and in realities will help us do our best work going forward," he said.
Nadella stressed Microsoft's role in a software-powered world. "We have talked about how our strategy going forward is about devices and services," he said.
"This business is exciting, because it does not respect tradition. What we have done in the past is in the rear view. It is all about innovation going forward.
"What will define Microsoft going forward is mobile first, cloud first and the question for us is how we thrive in that world."
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Speaking on the webcast about this strategy, Nadella hinted that all future Microsoft product launches would address the company’s devices and services initiatives. In what appeared as a call to arms for Microsoft product engineers, he said he wanted the company to focus on what he described as the ingenuity in Microsoft’s products, that no other company would be able to replicate.
He said Microsoft's culture needed to be renewed to remain focused on the software business. Nadella said: “We have to do new things, but we are very confident of in our capability around software.
"Software embodied in our devices and software is the real place where Microsoft has a unique role to play.”
Nadella said today’s definition of mobile was skewed to the mobile phone, but in the future there will be the industrial interest. "Everything will be connected to cloud and data. All of this will be mediated by software," he said.
"Software is the most malleable thing – to define the experiences, the insights, the ambient intelligence that will power device experiences."
Responding to a customer on the question of why devices matter in a software world, Nadella said: "Devices are where experiences come together. On Surface Pro, a lot of the experience is on the device, but all of the applications that run on the device have back ends in the cloud." He said Surface 2 exemplified Microsoft's mobile-first and cloud-first position.
Nadella addressed the IT administrator community, discussing “great experiences” and “people-centric IT”. He said Microsoft would provide tools that would enable IT to maintain control and enable users get control of their devices. These tools would work across devices, covering identity management, device management and endpoint security.
All, he claimed, would support IT administration without compromising the user experience.
Commenting on the news of the appointment, Ollie Ross, head of research at IT director group The Corporate IT Forum, said: "Nadella's appointment amidst strong talk of innovation and transformation would appear to offer some clarity, and might hopefully assuage recent uncertainty amongst enterprise users about Microsoft's future direction."
Employment site Reed.co.uk runs on Windows server and SQL Server. The company also uses Google Enterprise, and other non-Microsoft cloud products on the desktop.
Head of technology, Mark Ridley, said: "Microsoft has felt like a company that undermined its brilliant engineering talent with a lack of strategic vision since Gates's departure and my main hope is that Nadella has Gates's capacity to bridge the divide between engineers and marketers.
"It's great to see Microsoft have handed the reins back to someone with an engineering background. I hope that Nadella's history in the server and tools business and R&D can refocus Microsoft as a technology company."
Using both Microsoft and Google products, Ridley said he wanted to see a new focus for Microsoft under Nadella’s leadership, taking the fight back to Google. "As users, that competition will be great for all of us," he said.
Radical change needed
David Bradshaw , research manager for public cloud for Europe at analyst IDC, said: "I don’t sense a radical change in direction. Microsoft is in a difficult position, compared with where it was 10 years ago. Cloud social mobile and big data are changing the IT industry."
While Bradshaw expected Nadella’s appointment would boost the company’s cloud focus, he said Microsoft needed to make some changes in other areas of its enterprise business.
"It has too many ERP suites including Great Plains, Axapta, Dynamics and Navision. This is an area where Microsoft has talked about bringing in a cloud alternatives but it has not got very far," Bradshaw said.
Nadella is not afraid to make take major decisions, he said. "He hacked out major parts of the server division when he was in charge, and took out two organisational layers," Bradshaw said.
Microsoft after Windows
Some experts believe Nadella will need to look at moving Microsoft beyond Windows.
Analyst Gartner said Microsoft needs to shift from incremental enhancements to the legacy Windows PC and Office world to creating new, innovative and disruptive offerings for the future.
“Microsoft is facing significant challenges in the mobile space in both the smartphone and tablet segments,” said Gartner fellow David Cearley.
"It needs to have a compelling experience and set of apps without considering the legacy Windows environment."