Thu, Feb 06, 2014 - Page 15 News List

Microsoft hopes new, old leaders rekindle its magic

TOO MANY COOKS?Analysts question how much change new CEO Satya Nadella will be allowed to make, with Bill Gates and Steve Ballmer looking over his shoulder

Reuters, SEATTLE

New Microsoft chief executive Satya Nadella, center, addresses employees, along with founder and technology advisor Bill Gates, left, and outgoing chief executive Steve Ballmer on the company’s campus in Redmond, Washington, on Tuesday.

Photo: Reuters

Microsoft Corp is betting a mix of old and young blood will revive the aging technology pioneer, but new chief executive officer Satya Nadella may find it tough to push change with co-founder Bill Gates and former chief executive Steve Ballmer breathing down his neck.

The 46-year-old India native and former enterprise business chief takes on the monumental task of exploring new directions — but with Gates as his consigliere, and on a strategy that Ballmer orchestrated with the board.

That uphill endeavor helped sour other candidates on the job, including proven change agent Alan Mulally at Ford Motor Co, sources have said.

Gates is giving up the board chairmanship to fellow director John Thompson. That, plus Nadella’s promotion, marks a changing of the guard at a 39-year-old company that fueled the PC revolution, but is struggling with its longer-term identity after missing the boat on the mobile computing revolution.

“You’ve got a triumvirate running the company: Satya as the new CEO, Bill as the product adviser and John Thompson running the board. A lot depends on how the three of them get along,” Harvard Business School professor and former Medtronic Inc CEO Bill George said. “The big question I have is: Is Satya really going to be allowed to make the transformative changes that Microsoft needs to make, both at the product level and at the people level?”

The new Microsoft focuses on “devices and services” rather than licensing software, and seeks to emulate Apple’s success in marrying popular online services with attractive gadgets.

Set by the retiring Ballmer last year, that vision has proven unpopular with investors hoping either that Microsoft will stop plowing billions into mobile devices — as it is doing with its Nokia acquisition — or come up with new products to take on mobile leaders Apple Inc and Google Inc.

“From a bigger-picture perspective, I don’t think much is going to change,” said Sid Parakh, an analyst at fund firm McAdams Wright Ragen. “The strategy that was put in place in 2013 is where the company is headed.”

On Tuesday, Gates — who may again become a regular sight around Microsoft’s Redmond, Washington, campus after pledging to spend one-third of his time as the new CEO’s adviser — stressed that Nadella’s cloud-computing expertise qualified him to lead Microsoft into the new arena of mobile computing.

“Satya’s got the right background to lead the company during this era,” he said. “There’s a challenge in mobile computing. There’s an opportunity in the cloud.”

The online element may play to the strengths of Nadella, who led the creation of Microsoft’s Internet, or “cloud,” services.

Nadella has pushed the company in the direction of an Internet-based future, using its network of vast data centers to host products such as Office 365, a subscription-based online version of its ubiquitous business software.

He “bashed heads together on the product teams to get them to support cloud deployment in a consistent way,” said Ted Schadler, an analyst at tech research firm Forrester. “Every software company has to engineer this shift to software as a service, because 10 years from now, there’ll be no such thing as a licensed piece of software.”

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