It has finally been revealed that after a long search Microsoft has found its new CEO… in the office down the corridor. Satya Nadella takes the big desk in the corner office after previously heading up Microsoft’s Cloud & Enterprise division. Apparently he was in charge of building the background cloud operating system for services like Xbox Live, Skype and Bing. Hey, two out of three ain’t bad!
Now he’s CEO though he’s going to have to cast his net over all of the Microsoft empires diverse set of properties – and here’s our list of what’s probably going to be in his in-tray to sort out on Day 1.
Figure out what to do about Windows Phone
Despite Redmond’s best efforts, the Windows Phone platform is languishing at around 4% market share compared to the titans that are Apple’s iOS and Google’s Android. It isn’t just a matter of pride that is harming them in this space – lack of users, means lack of developers wanting to make apps for the Windows platform… meaning less users, creating an unvirtuous cycle of misery for everyone involved.
Microsoft are also in the middle of putting the finishing touches to a deal to buy Nokia’s phone division – which will make a near negligible impact on market share, but will give them more resources for making phones with.
Arguably Nadella’s hands are a little tied here – everyone knows that mobile is the future (and indeed, the present), so to retreat would be embarrassing, given Microsoft know that they need to retain some skin the game. So he may just have to keep pouring money down the black-hole and hope that some of it at least makes a difference.
Make the Xbox One competitive
Last generation, the Xbox 360 was a huge success. Whilst neither it or the PS3 sold quite as well as the Playstation 2, it kept pace with Sony’s competing console and in many markets was the clear ‘winner’ – in the UK for example for every PS3 sold, Microsoft shifted 1.51 Xbox 360s.
As the next generation takes hold though things are looking a little less sure. After what was widely regarded as a disastrous announcement thanks to the DRM fiasco, the Xbox One has had a solid launch in Europe and the US… though the lead amongst early adopters is held by the PS4, which in a reversal of fortunes is outselling the Xbox One by nearly 1.5 times (in the UK, at least).
The competition isn’t helped by the Xbox One being £100 more expensive than the PS4 – because of the included mandatory Kinect 2 camera.
Whilst Nadella has no need to be really worried, he needs to keep an eye on this competition, and needs to make sure the Xbox One remains competitive. As not only does the console war promise billions of dollars to the victor, but its also Microsoft’s trojan horse into the living room, and all of the lucrative opportunities there.
Figure out what the PC is for now
It turns out that these days, not everyone needs a PC. Whilst in the past we may have relied on Windows running on a trusty grey box in the corner of the room, now the internet is everywhere and it is portable too. We have tablets and phones for access – not to mention a tonne of other devices. Heck, some people will now happily go without a computer at all. As Slate’s Matt Yglesias points out, for people who don’t need a computer for work – chefs, hairdressers, lorry drivers and so on… why buy a PC when you can get all of your social networking, shopping and entertainment via your phone or tablet?
2013 saw the PC market shrink even more – and this trend looks only set to continue. Which is a bit unfortunate if you’re Microsoft and making a PC operating system is one of your main activities.
Even more dangerously for MS, we’re increasingly doing stuff in the Cloud (as Nadella should well know!) – so less people need a fully blown operating system, when all they really need is a browser window and wifi access.
Microsoft are evidently bricking it over Google’s Chromebook, which does exactly that – which is why they’ve put out a series of catty advertisements like the one below that was released today (!).
Nadella is going to have to think hard about this problem – and perhaps just accept that the PC is dying now, and that Microsoft should supplement its income another way.
Figure out how to make money without selling your operating system
Let’s face it – Windows 8 is terrible. There’s so many countless ways in which it is horrible, which I’ve explained at length before. In short – the key selling point of “one experience on all of your devices” is a really bad idea… and you only have to try to use a touchscreen app with a mouse to figure that out.
Windows 8.1 is healing some of the bruises but already you can see consumers going elsewhere. It’s taken this long for Windows 8 to pass the equally horrible Vista in terms of market share, and Dell have even started selling Windows 7 PCs again due to popular demand.
We’re over a year away from Windows 9, so Nadella needs to get into action and do something to win back the trust of consumers. Perhaps he could start by putting the Start button back?
Keep Office relevant
Finally, this is perhaps a slightly less urgent problem but one to think about nonetheless. Nadella, as mentioned, is from the Cloud and Enterprise division of Microsoft so will have a handle on how people are shifting into the Cloud. And not only is this a problem for Windows as a whole, but also for their lucrative Microsoft Office suite.
Whereas in years past we were ruled by the tyranny of the .doc or .docx, now with online platforms we’ve got many more options for editing and reading these documents. And as a friend of mine remarked a few weeks ago: completely inexplicably Google Drive doesn’t feel as ‘heavy’ as Microsoft Office. Case in point: I’m currently writing this on Google Drive as all I need is text a little bit of formatting – rather than use the bulky behemoth that Office has become, and have my computer take the performance hit.
For many years now Microsoft have been busy adding feature after feature to Microsoft Office, with very people stopping to ask “why?”. Whilst 99% of users may find use in the bold, underline or spell checker tools… what about the rest?
Office is another tool that could have the rug pulled out from underneath it as users switch to alternatives. And this is something Nadella should be aware of.
So what to do first?
As you can see, there’s a lot for Nadella to think about. If you ask me, Windows and Windows Phone are the most pressing issues. Lucky for him, Microsoft is a big company that is still making a lot of money. It’s not like it is on the verge of bankruptcy, and it is still making millions every year – but the above are important strategic choices that will have to be made, in order to avoid problems in the future.
So it’s going to be a busy day at the office for Satya Nadella. At least after a long day he can kick back and relax by playing some Xbox or watching one of these new documentaries that Microsoft are funding.
By James O'Malley | February 4th, 2014