Cloud VP Satya Nadella takes over as chief executive officer while Gates becomes technology advisor

Microsoft Corp.’s new CEO says his first day on the job is “a very humbling day for me.”

In an email to employees Satya Nadella, who has been with the company for 22 years, said he came to Microsoft because it was the best company in the world.

“I saw then how clearly we empower people to do magical things with our creations and ultimately make the world a better place. I knew then there was no better company to join if I wanted to make a difference. This is the very same inspiration that continues to drive me today.”

Nadella had been executive vice-president of its enterprise and cloud computing business.

 

Natella, centre, meets staff with Gates, left and Ballmer
Natella, centre, meets staff with Gates, left and Ballmer

 

Former Symantec CEO John Thompson was appointed the new chairman of the board, replacing co-founder Bill Gates. He stays on the board but as Founder and Technology Advisor. In that post he will help Nadelloa shape technology and product direction.

Forrester Research analyst Ted Schadler noted that “a leadership transition is a delicate balance between continuity and disruption. The most important thing for the Microsoft board right now is to make sure that the new CEO is fully supported without being hamstrung. Bill Gates leaving and Steve Ballmer staying on as a board member would accomplish that.”

Schadler’s colleague at Forrester James Staten described Nadella as “a tough, number-driven leader.” His appointment “will be a great thing for the overall direction of the company. He is a visionary, has passion for change, is making it happen and knows what it takes to drive change in the unique Microsoft culture. An outsider would have a hard time accomplishing this coming in fresh. And time is of the essence.”

Founded in 1975, Microsoft once dominated the PC industry, with releases of MSDOS 6 and Windows 95 and XP being eagerly awaited by millions of people lining up in stores and pulling in billions of dollars in revenue. Windows Server became a corporate mainstay, shouldering aside Unix for many workloads.

But cloud computing has gotten in the way of Microsoft’s leadership. Today people are buying tablets and PC sales have slowed. Instead of buying Microsoft solutions organizations are increasingly looking at cloud-based software-as-a-service solutions like Salesforce, Gmail and Google Docs.

Microsoft is still hugely profitable, but it doesn’t lead in cloud, nor in tablets or smart phones. To cover that last bet, it is in the middle of closing the acquisition of Nokia’s handset division.

In an interview Rob Helm of the industry analyst firm Directions On Microsoft said Nadella’s appointment reinforces what Ballmer wanted to do when he re-organized the company last year to better co-ordinate Microsoft’s technical roadmap. Nadella is one of the company’s long-time strategists, he pointed out.

“So I think a lot of technology decisions are going to go all the way to the top and you’re going to see a more co-ordinated approach.”

He also acknowledged that the company is in better shape than some critics give it credit for. In cloud computing it already has a credible plan. Under Nadella it has built a data centre infrastructure to play with leading competitors, he said, and Windows Azure service can compete with Amazon Web Services.

On mobile devices “the path forward is less clear,” he agreed, but Microsoft “can take the long view and wait for competitors to make a mistake.”

“It is an incredible honor for me to lead and serve this great company of ours,” Nadella wrote. He paid tribute to former CEO Steve Ballmer and co-founder Bill Gates, who he said, have taken Microsoft “from an idea to one of the greatest and most universally admired companies in the world. I’ve been fortunate to work closely with both Bill and Steve in my different roles at Microsoft, and as I step in as CEO, I’ve asked Bill to devote additional time to the company, focused on technology and products.”

To those who might wonder why he wants the job, he said “I am here for the same reason I think most people join Microsoft — to change the world through technology that empowers people to do amazing things. I know it can sound hyperbolic — and yet it’s true. We have done it, we’re doing it today, and we are the team that will do it again.

“I believe over the next decade computing will become even more ubiquitous and intelligence will become ambient. The co-evolution of software and new hardware form factors will intermediate and digitize — many of the things we do and experience in business, life and our world. This will be made possible by an ever-growing network of connected devices, incredible computing capacity from the cloud, insights from big data, and intelligence from machine learning.”

As for future, Nadella,46, paraphrased Oscar Wilde: “We need to believe in the impossible and remove the improbable.”

Since joining the company in 1992, Nadella has spearheaded major strategy and technical shifts across Microsoft’s portfolio of products and services, the company said in a statement, most notably the company’s move to the cloud and the development of one of the largest cloud infrastructures in the world. He also oversaw Microsoft’s [Nasdaq: MSFT] server and tools business.

 

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