Microsoft Names Satya Nadella As Its New CEO

February 5th, 2014 by Trefis Team
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Microsoft (NASDAQ:MSFT) named Satya Nadella, former head of the cloud and enterprise division, as its new CEO. Furthermore, the company founder Bill Gates has stepped down from his role as chairman for a new role as technology adviser to CEO. Board member John Thompson, former CEO of Symantec, will serve as Microsoft’s new chairman.

The software giant announced on Tuesday that Nadella will replace Steve Ballmer, who in August said that he would step down as CEO of Microsoft within 12 months. While it is too early to speculate on the strategy the company might adopt going forward, this appointment signals Microsoft’s strong commitment to business growth through its cloud offering, which registered over 100%  growth last fiscal. [1]

See our complete analysis of Microsoft here

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Is He The Right Man For The Job?

The five-month long search for a new CEO ended with the appointment of Satya Nadella — an electrical engineer and a 22-year Microsoft veteran. A careful analysis of the profiles of other contenders such as Alan Mulally indicates that the management selected the best candidate for the job, considering the company wants to strengthen its footprint in cloud services and the mobile vertical.

Nadella has extensive experience working with cloud technologies compared to some of the other candidates who were from different industries. Satya Nadella is not only a company insider but also helped grow Microsoft’s Cloud and Enterprise Group (CEG) — which accounted for $20.3 billion in revenue and $8.2 billion in operating income last fiscal year (ended June 2013). As the chief of CEG, Nadella oversaw Microsoft’s server software for corporate customers. He was also in charge of several consumer cloud products such as Office 365, as well as the Bing search engine, Xbox Live and Skype. Over the course of his tenure, he was instrumental in transforming the company’s technology culture from client services to cloud infrastructure and services. [2]

While Nadella faces stiff challenges heading the 100,000+ employees, we believe he can successfully integrate different company divisions backed by his extensive experience at Microsoft. We expect Nadella to gradually disclose his growth strategy for Microsoft in the upcoming events. However, it remains to be seen whether Nadella’s engineering background, along with Bill Gates’ close involvement in product decisions, will help the company turn over a new leaf in the growing cloud domain. We note that Gates appeared to be delighted that Nadella requested his higher level of involvement. Reports indicate, moreover, that Nadella is to view the full board as his boss.  Considering that Ballmer and Gates are on the board, along with Chairman John Thompson, this is no surprise.

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Notes:
  1. Nadella Says Microsoft’s Cloud Growth at 100%, December 10 2013, www.bloomberg.com [↩]
  2. 10 Things to Know About Satya Nadella, Microsoft’s New CEO, February 4 2013, www.time.com [↩]