It’s been just over six months since Steve Ballmer vacated the CEO position at Microsoft and Satya Nadella took over the reins at the software giant in Redmond, Washington. In his free time, Ballmer purchased the Los Angeles Clippers, and many of us NBA fans can’t wait to see if he gives Mark Cuban, owner of the Dallas Mavericks, a run for his money in terms of entertainment value.
Nadella has taken a more subdued approach as he steers Microsoft in a new direction he calls a “Mobile first, cloud first” strategy. Of course, that simple catch-phrase leaves a lot to the imagination, so I decided to take a look at what Microsoft might look like under Nadella’s leadership.
One thing to keep in mind is that Microsoft is a huge company. With the purchase of Nokia, Microsoft now has nearly 130,000 employees worldwide working among three primary business units:
- Windows, Server & Tools, & Online Division
- Business Division
- Entertainment & Devices Division
Traditionally, Microsoft has derived the vast majority of revenues and profits from the first two divisions. Microsoft has made significant investments in Entertainment (Xbox) and Devices (Windows Phone) in order to play catch up to competitors, but profits have remained elusive for that division.
In the minds of many, Ballmer represented the traditional Microsoft, enthusiastically churning out new versions of their flagship products like Windows and Office every few years. Nadella steps into the CEO position after spending his last few years growing Microsoft’s “new” cloud services into a $20 billion business, a fact that probably lead to the board naming him to the CEO position.
Although I spent a good portion of my career at Microsoft, I don’t have special access to upcoming product or services. But I continue to follow the company closely and have some thoughts on what areas they might go after next.
Xbox Lite and Xbox Portable?
Remember when Microsoft hardware was comprised of keyboards, mice, and USB powered speakers? Step into a Microsoft Store today and you’ll find the sleek Surface 3, Windows Phones and Xbox game consoles, all made by Microsoft.
With the purchase of Nokia, Microsoft immediately adds design and engineering expertise to compete with anyone, including Sony and Apple. Instead of building just another desktop PC, Microsoft decided to create the Surface, with the goal of merging a tablet and laptop. The latest Surface has been met with positive reviews, although it’s still too early to call it a success. But it’s been encouraging enough that I wonder what’s next? I could see Microsoft create at least two new products under the Xbox umbrella: Xbox Lite and Xbox Portable.
It wouldn’t take Microsoft much to create their own version of the tiny Roku or Apple TV that streams music and video content from the Xbox Store. Maybe it’s closer to the Amazon Fire TV in that it streams media and plays casual, downloadable games. Xbox Portable seems like a no-brainer given the success of the Nintendo DS franchise and Sony PS Vita. I wondered if Microsoft has the design chops to create a device that feels polished and personal to the touch, but they have proven that’s possible with the Surface 3 and latest line of Lumia phones.
Microsoft recently purchased Mojang, the company behind Minecraft, for $2.5 billion. Minecraft is immensely popular with youth, and it runs on a number of platforms including Windows, Android and iOS. I’m sure we’ll see a Windows Phone version at some point, but I believe Microsoft sees value in having applications that reach a wide audience across many platforms. Today, Minecraft is a one-time $25 purchase. I wouldn’t be surprised to see Microsoft make new content available for purchase.
Microsoft has already created Office for the iPad as well as a number of stand-alone iOS apps including OneDrive, OneNote, and Bing Search. I keep coming back to Nadella’s “Mobile first, cloud first” mantra, and this multi-pronged approach fits well within his vision.
Apps can be tricky business for Microsoft because Android and iOS dominate the mobile landscape today. Creating quality apps for competing platforms must be a tough pill to swallow. Unless Microsoft doesn’t obsess about owning the entire ecosystem, which is an attitude Nadella has shown. Microsoft can continue to build apps on competing platforms that tie into Microsoft cloud services. “Go to where the users are” might be a brilliant strategy in the long run, as long as Microsoft can convince those services are worth paying for.
I believe the cloud is the future of Microsoft and Nadella is the person to make this happen. He’s well on his way with products like Azure, Office 365, Exchange Online, and SharePoint Online. Microsoft wants to be more than your data center. As Microsoft Technical Fellow recently said, “All roads lead to Azure.”
Azure is Microsoft’s cloud computing platform and infrastructure for building and deploying services and applications that competes with similar products from Amazon and Google. Azure is owned and operated by Microsoft in data center located across the globe.
While we’re all familiar with desktop operating systems such as Windows and Linux, we’re just starting to learn what it means to have an operating system in the cloud, and that’s basically what Azure is. Yet it’s an operating systems that supports Linux applications as well as it support Windows services. In a sense, the cloud is platform agnostic, supporting whatever it needs to.
At the consumer level, many of us already rely on a number of popular cloud services such as Spotify, Dropbox, or Google Docs. I can’t imagine ripping and managing another mp3 collection, and Spotify did away with all that, and just let me listen to music. Adobe has been able to migrate many of its customers over to Adobe Creative Cloud from its traditional boxed software business.
So where does the cloud go from here? I believe we’ll see more and more business applications, games and consumer applications run from the cloud. I know that’s not very exciting to many, but it opens up a lot of opportunities for developers of these programs because they can outsource the deployment and management while focuses on creating great products.
So far Nadella has shown that he’s not afraid to break from tradition and steer Microsoft in a new direction. The new Microsoft might look a bit more like IBM, which has found success selling high margin services alongside hardware. Ballmer was around when Windows and Office helped build Microsoft into the juggernaut it is today, but Nadella is smart enough to know that Microsoft can’t rest on those laurels forever. So while the press swarms around new smartphones and watches, Nadella might be perfectly happy being the brain behind the curtain that feeds all those devices.
Top photo credit: Ben Franske via Wikimedia.