Friday, March 24, 2023
HomesoftwareMicrosoft's new CEO: An insider and a 'cloud' man

Microsoft’s new CEO: An insider and a ‘cloud’ man

Satya Nadella, a Microsoft 22-year veteran who headed the software giant's Cloud and Enterprise group, has taken the helm as chief executive officer, in a move by the company that reveals a lot about its strategy moving ahead.

While several analysts told CNBC last week that the choice of Nadella, 46, makes strategic sense, it also would be considered a safe bet. Nadella has been leading Microsoft's cloud division, and it would be a clear signal that enterprise software is, and will continue to be, the focus of Microsoft's strategy.

Re/Code's Kara Swisher first reported that Microsoft was closely considering Nadella as CEO. Microsoft offered no comment on the report at that time. Microsoft's search committee worked hard for six months to find a new CEO to succeed Steve Ballmer.

Satya Nadella, CEO of MicrosoftSource: Microsoft

"The Cloud is the epicenter of Microsoft's future success. They're really going for the golden jewel within the enterprise. More and more, spending is going toward the cloud. For Microsoft to be a very relevant player, they need to have success in the cloud, which speaks to why Mr. Nadella is front and center as the potential CEO," Dan Ives, vice president at FBR Capital Markets, told CNBC last week.

(Read more: Microsoft tapsNadella as CEO; Gates era ends)

It wouldn't be going out on a limb to say Nadella is a Bill Gates/Ballmer disciple. The Hyderabad, India-born Nadella has background in electrical engineering and computer science, and if there is one thing he's very familiar with, it's how business is conducted at Microsoft.

Some analysts, however, have said that Nadella may be too much of a Microsoft insider. Some analysts were hoping for an outsider to invigorate Microsoft's leadership with new energy and gravitas.

"At the end of the day, the optimism around Microsoft is that you could get a fresh perspective, an outsider, someone who's willing to make tough decisions with the enterprise and consumer business. Do you spinoff Xbox? Now that they're going with an insider, it looks like that's off the table," Ives said.

(Read more: Microsoft earnings easily beat Street expectations)

While Nadella knows the cloud and the ways Microsoft works, he has no experience as a CEO. And this isn't just any company, Microsoft's market cap is nearly $313 billion, third in the tech sector behind Google's $396 billion, and Apple's $446 billion.

"I think for Satya not having been a CEO and stepping in to what will soon be a 130,000-person company, he's going to be a work in progress probably for awhile, kind of ramping up," said Rick Sherlund, head of U.S. technology equity research at Nomura Securities. "There's so much for him to accomplish strategically and operationally."


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