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Microsoft - Seeking a Change
Posted by: Live investor (IP Logged)
Date: February 8, 2014 11:49AM

Microsoft (MSFT) is finally done with a big job of identifying its next CEO. After pooling in as many as 100 applicants for the position, the global tech giant settled on Satya Nadella, a 22 year veteran in the company who joined Microsoft in early 1990s. There were speculations that Microsoft would appoint an outsider as the company’s next chief executive who would start things afresh for its business after Steve Ballmer announced months back that he would retire soon. However, it preferred to play safe by giving the rein to someone who is already accustomed with the company.

Another dramatic development
There is another important announcement that the Redmond based company made regarding its co-founder Bill Gates (Trades, Portfolio) expected contribution. Gates would step down from his current position as the company’s Chairman and instead concentrate "in shaping technology and product direction".

Left: Satya Nadella, Right: Bill Gates (Trades, Portfolio)

The move has been done on purpose. While the tech giant is empowering Nadella to go ahead with his vision, Microsoft is also giving its new leader the much required support of Gates. This would alleviate Nadella’s fear of his lack of practice in the consumer space. He would manage the enterprise side of the business, while Gates would carry out his technology vision and take care of consumer products such as the Windows smartphone where Microsoft is facing intense competition from Google’s (GOOG) Android and the Apple (AAPL) iPhones.

How successful would the duo be in overcoming challenges?
Gates knows that the consumer market was the driving force that made Windows what it is today. But there are things that didn’t work for Microsoft. Most widely used and user friendly desktop OS Microsoft Windows was enormously successful for the company. The tech player even has a mobile OS, but sadly its Windows phones have failed to click the masses. This is where Samsung (SSNLF) smartphones powered by Google Android take the lead. And as far as the upper crust of the society is concerned, they prefer holding the iPhone over any other handset.


Microsoft’s hold in the tablet market is weak as well. Here again Apple’s iPad and Samsung remain dominant players. Despite such challenges, the company is making good money as it sits atop a staggering cash balance of $84 billion. Microsoft had a search engine and a web portal as well, but here again it got swiped away by Google search engine.

Obviously all this is not pleasing Microsoft any further, and thus we can expect Gates increased involvement. The Co-founder shall now devote a third of his work hours on counseling the company on its products and technology development. Also, his increased involvement is essential to help and coach Nadella to complement his work. The synchronization of these two intellectual giants would be interesting in particular as both of them are hard core technologists.

Microsoft is quite confident that Nadella is the finest person to bring the company’s focus in merging software and gadgets with cloud computing that would improve the application delivery over the internet. Nadella has also bagged critical appreciation from his colleagues and company analyst regarding his knack technology. His time spent with the company makes him know it inside out. He has worked in several fronts including data centers, cloud computing, video game consoles and internet search.

Last word
With the new team set, Microsoft can look forward for a turnaround. Although competition has grown over the years, and Microsoft somehow couldn’t catch up to it, I believe there are exciting days ahead of this tech. What do you think?

Stocks Discussed: MSFT, GOOG, AAPL, SSNLF,
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