The Search is Over

Microsoft has a New CEO – Satya Nadella

I first saw this on Wired, but didn’t put any credence in it until I saw Mary Jo Foley’s article on ZDNet. Based on what we’ve been seeing, despite my earlier column on how association with Ballmer may be a tough hurdle to clear, Microsoft gave Nadella the nod anyway and on Tuesday 2014-02-04 made him the company’s third CEO.

Satya-NadellaThere are three other announcements that go along with this:
1.    Ballmer is out, effective immediately. However, he remains a member of the Board of Directors.
2.    Gates is stepping down as Chairman to take a role on the Board as Founder and Technology Advisor.  You can think of him as Nadella’s consigliere or major domo.  He will “devote more time to the company, supporting Nadella in shaping technology and product direction.”
3.    John Thompson, who was the one-man force behind the CEO search, is taking on the role of Chairman of the Board, effective immediately.

Nadella’s first issue is likely to be some level of “discussion” involving the support of the “One Microsoft” initiative that Ballmer laid out in the July 2013 reorg.  ValueAct’s Mason Morfit is taking a seat on the Board in about a month or so of this writing (March 2014).  The One Microsoft initiative has Microsoft supporting both consumer and enterprise sectors of technology; and Morfit doesn’t support that business strategy. He wants Microsoft to drop consumer hardware efforts like Surface, Windows Phone and Xbox One. He’s also not a Bing fan, either.

Microsoft recently agreed to make Morfit a member of the Board in order to avoid a proxy fight initiated by ValueAct if Microsoft didn’t agree to drop or scale back the consumer side of the business. Taking that on as one of his first issues as CEO would be a challenge for anyone. It certainly looks like Nadella will have his hands full, if that does, in fact, happen.

Nadella has a lot to offer Microsoft as CEO. Most notably, he has 22 years at Microsoft and knows the culture and people. Individuals coming from the outside, taking visible, upper management roles have historically not done well at Microsoft due to the high technical nature of the culture and business.  Nadella won’t have issues there.  His background as an engineer will help him a great deal, as will his tenure at the company.  He doesn’t have anything to prove, and the ‘Softies have already afforded him credibility.

This is Nadella’s first go as CEO, so we’ll have to play a wait and see game before we know how independent he truly is.  Gates’ new role as Founder and Technology Advisor may be created specifically to give Nadella someone he can go to for advice, guidance and assistance. It may also be nothing more than a PR gimmick to help “erase” the Ballmerfication that I mentioned the other day.  We’ll have to wait and see.  However, given Nadella’s experience as an engineer and as the enterprise and cloud services guy, he’s got a good background to take the company into the future…provided he’s really given the opportunity and support to do so. It depends on how much of a voice Ballmer and Morfit each have on the Board.

What do you think? Did Ballmer really suck THAT bad? Is Gates’ new role as Founder and Technology Advisor for real or for show? Will Mason Morfit give Nadella problems, or will he wait and see how things go before pressing his agenda at the Board level?  Does Nadella look as though he will be successful, or will his entrance start the spinning of a revolving door outside the CEO’s office?  You tell me.  Why don’t you join me in the discussion area, below and give me your thoughts…?

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Is Microsoft Preparing to Name Satya Nadella CEO?

It seems the candidate pool is getting smaller…

Satya Nadella 2012I’ve been trying to cover Microsoft’s CEO search since Steve Ballmer announced his retirement last year.   There have been a number of interesting candidates and one or two that I think would have made a decent leader for the tech giant. Recently when Alan Mulally pulled himself out of the running, Nadella appears to have emerged as the top candidate.

It also seems that this may have been the direction all along.   While no one at any major news outlet is citing any named sources, and with other internal and external candidates either having been eliminated or dropped out, Nadella is the one name that has remained near the top of the list.   Microsoft wants to name a new CEO in the early part of 2014.

ZDNet’s Larry Dignan says that the Microsoft CEO spot is “the job that no one is jumping for.” I agree. It truly seems as though succeeding Ballmer will be a big challenge, especially with him continuing to be part of the Board of Directors after his retirement.

However, it seems as though Nadella won’t have to contend with Bill Gates as Chairman of the Board. There have been a number of stories circulating with Nadella’s candidacy looking more and more like a done deal, that Bill Gates will exit the organization as Chairman of the Board at Microsoft.   Gates wants to focus the rest of his life’s work on the Gates Foundation that he founded with his wife.   Board member John Thompson, who is heading up the CEO search, is said to be a front runner for the Chairman spot if the rumors about Gates stepping down are true.

The whole setup with Gates and Ballmer still on the Board is likely one of the biggest issues for anyone interviewing for the Microsoft CEO spot. Who would want the company’s top leadership role when you have both the original and 2nd CEO scrutinizing your every move?   Not many, it would seem.

Mary Jo Foley also said that when she sat down with Ballmer AND Nadella in separate interviews in November of 2013, she didn’t get any kind of indication as to who would eventually win the CEO spot; and she still isn’t certain.   The world is waiting for an answer; and it looks like it will have to wait until some thing formal comes out of Redmond. Until then, it may look good for Satya Nadella and his decades of experience at Microsoft; but we’re definitely in wait and see mode.

What about you? Do you feel that Satya Nadella is the best choice for Microsoft CEO; or is there a better candidate out there? I’d love to hear what you think in the discussion, below.

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Microsoft CEO Search Rumors

Now that Alan Mulally is out of the running, where does Microsoft look for their new leader?

image2993A lot of wind was taken out of a great many sails in the past couple of weeks. Alan Mulally, CEO of Ford Motor Company and thought to be the front runner in Microsoft’s highly visible CEO search, recently took himself out of the running for the Redmond, WA company’s top spot. Now the whole world is wondering what Microsoft will do; and what direction they will head in.

Yes. Microsoft could promote Satya Nadella. That’s still a huge possibility.   Based on Mulally’s removal, I’m certain that many – if not most – people are expecting Microsoft to quickly march in that direction. However, that may not be the case.   Based on Mulally’s removal, if Nadella was the front runner, this would be a done deal by now.

I think many folks – including those that inhabit Wall Street – are wanting and expecting Microsoft to hire from the outside for this role.   I know many in the tech journalism field are a bit happier with those prospects than with the idea of promoting from within. It has nothing to do with Nadella – what he can or cannot do.   It has more to do with breaking away from the old guard and starting anew with someone who has a clear understanding of either how to rebuild troubled organizations (as Mulally did) or with someone who has a decent enterprise and mobile computing vision (as Ballmer never had).

Current word on the street is that Microsoft is  currently considering Hans Vestberg, CEO of Swedish telecommunications company Ericsson for software maker’s the top spot, at least all this, according to Bloomberg. The report, published  2014-01-16, indicated that Vestberg was a “media-savvy technology fanatic,” though many on Wall Street would find his candidacy a surprise.   However, with potential external candidates evaporating, I’m not surprised with anyone that Microsoft may give consideration to.

No matter how you slice it, Microsoft is expected to name a new CEO early in Q1 2014. The biggest hurdle that the new CEO will have, is not turning the company around, but likely that both Ballmer and Gates will retain their seats on the Board.   I can’t imagine any CEO wanting the company’s two previous CEO’s scrutinizing and critiquing their every move.   Ultimately, this may be why Mulally passed on the role.

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Step on it, Already

Microsoft’s Board moves its CEO search towards the end

Bloomberg is reporting that Microsoft’s CEO search is nearing an end.   The company’s board of directors will narrow its previous list of candidates (set at 8) to 3 to 5, according to the news outlet. That meeting, scheduled for  2013-11-18  takes place one day before Microsoft hosts its annual shareholders meeting not far from its headquarters, in Redmond, WA.

image2993

In a bid to keep or improve the momentum its stock saw since Steve Ballmer announced his departure within 12 months,   Microsoft will quickly advance its search forward.   Microsoft’s stock has jumped 17% since that announcement in August 2013. The company’s board would be negligent to allow it to fall off or stagnate.

There’s also been a great deal of criticism that many of the recent changes that Ballmer has enacted over the recent months, including the company’s focus change from boxed software to devices and services, its recent reorg – which was extensive – as well as its acquisition of Nokia’s handset business and the abandonment of its “stack ranking” employee evaluation system, would box the new CEO in and narrow their choices.   The fear is that this would effectively make them a replacement and not a successor.

The intent is to get a replacement in place by the end of the year.   If the selection process moves into 2014, then ValueAct’s president, G. Mason Morfit, a newly appointed board member, will have a more active voice in the choice of CEO as part of the recent agreement ValueAct and Microsoft entered into in August 2013. ValueAct Capital instituted a potential proxy fight and as part of the agreement to avoid that, Microsoft and ValueAct entered into an agreement that included a board seat for Morfit. The “more active voice” clause is also part of the deal, according to a filing with the SEC.

My friend Preston Gralla   had some  interesting ideas  on who that person might be. His take, and I agree with much of it, is that Microsoft needs a complete remake. That would kill nearly every internal candidate (Satya Nadella, Kevin Turner, and my speculation on a third internal candidate – Julie Larson-Green) as well as Stephen Elop.   Elop may be coming directly from Nokia, but he’s a former Softie, and was once part of the culture that needs to so drastically change. If I were a member of the MS Board, while Elop may institute change, I would be afraid that it wouldn’t be a big enough change.

That leaves just two real candidates – former Skype CEO Tony Bates and Ford’s Alan Mulally.   I honestly like both. While Bates may have the tech experience and the entrepreneurial drive that might be needed, I think Mulally is the better choice.   He has the corporate experience with a larger organization in Ford and has brought about the kind of rapid change that the MS Board wants. Mulally can always tap Tony Bates for COO, too; which would give the organization the best of both worlds.   It just may be the winning combination that Microsoft needs at this time.

I don’t want to push Kevin Turner out of a job, but in the end, it may be the right choice for Microsoft. If there isn’t another good spot for Turner within the organization, I’m certain he and his family won’t starve to death. Microsoft would likely take care of him if that scenario came about.

I’ll have more on the CEO developments at Microsoft as they become known. Please watch Soft32 for more on this developing issue.

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Microsoft Down to Just 8 CEO Candidates

…and I don’t care if you DID print your resume on hot pink, triple bond paper…

2013-10-24_02-55-11-1_large_verge_medium_landscape

I’ve been calling for it for years, because despite the fact that Ballmer is a really nice guy, he just doesn’t get mobile computing; but Microsoft has been hard at work. Despite the fact that the talk has died down, Microsoft is still actively searching for a new CEO. In fact, they’re down to about eight candidates – 5 external and 3 internal.

Its kinda interesting, as many people – me included – thought this was a done deal a couple different times. However, MS did the right thing and took the spotlight off the activity and quietly whittled the list down to a few candidates.  They include the following people:

External Candidates Include:

  • Ford CEO Alan Mulally
    Microsoft needs a success story candidate, and that’s Mulally. Ford had been in need of an image and financial make over, and Mulally delivered. Ford’s stock has done well in the recent past and the work they’ve done related to automotive connectivity with Sync and major smartphone carriers shows that Mulally understands mobility; and that’s something that Microsoft needs.  Mulally is also one of Ballmer’s go-to advisors as I understand it, so he is at least familiar with what is going on with Microsoft, its challenges and problems. As much as I think other candidates might be a better fit, Mulally may actually be what Microsoft needs.
  • Nokia CEO Stephen Elop
    Elop left Microsoft to join Nokia.  Just a short while later, Microsoft acquired the smartphone business from Nokia, bringing Elop back to Redmond. Elop understands mobility and mobile computing; and Nokia’s been the flagship Windows Phone maker for a while now. On paper, Elop is the candidate that makes the most sense. However, other external candidates have firsthand experience in pulling a troubled company out of murky water before the swirl gets impossible to handle. I want to want Elop for this role, but the more that I think about it, Mulally makes the most sense.
  • Three other, unnamed external candidates
    Reuters, who is the source here, did not have any additional information on external candidates.  Your guess is as good as mine here.

Internal Candidates Include:

  • Former Skype CEO Tony Bates
    Skye is a mobile communications company and Bates did a great job in building Skype into a popular must have internet property that Microsoft swallowed up and now has as the backbone of its Communications platform. Anyone that can do that, certainly has enough vision to turn Microsoft around.
  • Cloud and Enterprise chief Satya Nadella
    Nadella brought us Azure and helped reinvent SkyDrive. His star has been on the rise at Microsoft for quite some time, and while there may not be as much known about him as Tony Bates, Stephen Elop or Alan Mulally, I think Satya Nadella is the leading internal candidate at Microsoft for the vacating CEO chair. He’s continually brought value to the company, his focus with cloud and enterprise at MS will be a key foundation point in any new mobility or mobile strategy, and there isn’t a lot known about him, meaning that the market and the industry won’t be distracted by any back story developments or questions that would develop now that he’s left (Ford or Nokia) one company or is back in the CEO chair.
  • One other, unnamed internal candidate
    Again, Reuters didn’t have any information on who the last internal candidate might be, and didn’t speculate at all. I, however, think it may be Julie Larson-Green.  She’s the new EVP of Microsoft’s Devices and Studio group and has been with the organization since 1993. She has history; and has drive and vision.  As the only (real) female candidate that I know or have heard of, I think she has a decent chance in the race.  Putting a woman in charge would be a popular and trending play for Microsoft, who desperately needs as much positive spin on their next public move as they can get.

Many people have speculated that Bill Gates would come back as CEO and pull Microsoft out of the gutter. I don’t see this happening and there’s no credible source that I can find that would suggest that Gates is making another run for the corner office on Microsoft’s executive floor.

Who do you think should sit in the captain’s chair at Microsoft? I’d love to hear your thoughts in the discussion, below.

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Did Microsoft Just Buy a New CEO?

It seems awfully convenient that Microsoft has announced what could be HUGE, strategically acquisition over the Labor Day Holiday weekend…

It was announced over the weekend that Microsoft had acquired Nokia Devices division for roughly $7.2B USD.

nokia-microsoft

I’ll be honest – I really didn’t see this one coming – for a couple – three reasons:

  1. Microsoft had tried to acquire them before, and the transaction never happened. Nokia pushed back.
  2. Microsoft just announced a huge reorg. The amount of change created here is enough to keep Redmond busy, let alone having that combined with
  3. Steve Ballmer just announced his exit from Microsoft. The $900M write off was the straw that broke the camel’s back.

Just to clarify the timeline for everyone, because its critical to see what Redmond might be planning:

  • July 11: Microsoft announces a huge reorg.
  • July 18: Microsoft’s quarterly earnings are released, including a $900M write off for unsold Surface RT inventory.
  • August 23: Microsoft CEO Steve Ballmer announces he will be retiring.
  • August 30: Investment fund, ValueAct joins the Microsoft Board.
  • September 3: Microsoft buys Nokia’s handset unit.

There are a couple items here that should be brought to mind, related to the items on this list. First, the reorg, once thought to be set in drying cement, is now up in the air. With Ballmer exiting, any new CEO may come in, assess the plans and make changes or throw them out entirely. Secondly, there were no layoffs with the reorg. Most people were simply shuffled around. That is also completely up in the air now.

Thirdly, Investment fund ValueAct has been pushing for Microsoft to be split up into consumer and enterprise based companies. That is also a distinct possibility, as the new CEO could make the case and have that happen. Bill is still the chairman of the board, but clearly, it’s all about the dollars at this point. Bill gets to do his philanthropy stuff because Microsoft makes him money. Without that, Bill really can’t give it ALL away. Economics does play a REAL part here.

Given all of this, I was REALLY surprised that both companies announced the acquisition. However, many people are speculating that Nokia’s CEO, Stephen Elop, who goes to Microsoft as part of the acquisition, is now the front runner in Microsoft’s search for Ballmer’s replacement. If this is the case, it makes sense. Quickly, here’s why:

  1. Elop knows and understands mobility. It’s clear from what’s happened with and to Microsoft in the past 13 years of Ballmer’s run as CEO that he couldn’t even really spell mobility let alone understand and lead the company in that direction. Microsoft missed the boat with WindowsCE and PocketPC, blew the opportunity to create a solid mobile name with Nokia as simply a smartphone partner, and doesn’t know how to create an ecosystem around Surface and Windows RT. The company’s future is uncertain due to its disjointed approach to mobility, CoIT and BYOD. The window for fixing this is closing fast, and if they want to turn things around, they need a leader who understands this sector and isn’t afraid to make bold decisions.
  2. Splitting the company may, or may not, be easier now. With Elop now on board, envisioning a separate mobility based division or company is easy to see. Perhaps the board wants to take enterprise and mobility and draw the line there, with the mobility business handling the consumer end. When you bring in the Nokia mobile division into the picture, it’s very easy to see things working this way.
  3. Nokia has been around for 150 years. They’ve sold everything from paper products to rubber boots and tires. The organization knows how to change businesses and focus, which is something that Microsoft clearly is having a huge problem with. Hopefully, Elop with bring at least this much of Nokia’s culture with him and instill that into the new organization.

I’m going to be watching this topic, and as more information comes to light, I’ll likely have a bit more to say. Why don’t you tell me what you think in the comments section, below?

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Ballmer – Forced Out or Retired?

There are a number of credible rumors running round the internets on Steve Ballmer’s announced retirement.

ballmer

Steve Ballmer announced that he was retiring as Microsoft’s CEO last week. This is surprising and not so surprising at the same time.  As soon as the announcement hit, though, many people started speculating on what had happened.  Ballmer had mentioned retirement before, but not until 2018 or so.

There are two credible rumors that caused Ballmer’s ouster that I want to concentrate on with this column. Both are related, but in many ways have their own lives – the $900M Surface RT write down and Ballmer losing Bill’s support. I’m going to hit these briefly, because, quite honestly, there’s a great deal to ramble on about here…

$900M Surface RT Write-Off
The write off is old news; but very likely the cause that brought Ballmer down. I don’t care who you are, or what company you work for. If you’re the captain of the ship and get hit by that photon torpedo, either you or the ship is going down (or both, depending on the company). Thankfully, Microsoft can weather the storm, but it’s clear, they’re going to get a new captain.

Please remember that the RT hardware isn’t bad. I think both Surface tablets are decent, but it’s the tablet/desktop convergence that is the problem. It has confused and confounded users from the beginning. Microsoft is having issues shedding its traditional computing model, and that contributed to the write off and Ballmer’s downfall,

I’m not surprised, though. Ballmer has NEVER understood mobile computing. It’s the major reason why they continued to come behind RIMM (now Blackberry) back in the early to mid PocketPC/Windows Mobile days, and why Windows Phone, while considered by many to be a superior mobile platform, doesn’t have any real market share to speak of.

Interestingly enough, I wrote to Steve Ballmer 13 years ago and offered my services to him and Microsoft.  I got a letter back from his office saying, “thanks but Steve’s got this.” I am in no way saying I could have prevented this from happening, but either Ballmer wouldn’t listen to mobile strategists or they were afraid to stand up to him and tell him he was wrong. It’s too bad; and hopefully the new Microsoft and now new CEO will change the culture.

I’ve been calling for Ballmer’s ouster for years. It’s too bad it took a $1.0B finance hit to make it happen.

Ballmer Lost Bill’s Support
The other big rumor going around is that Steve lost Bill’s support at the Board level. Up to now, Steve’s had it. Bill – though not part of the day-to-day at Microsoft any longer – handpicked Ballmer to succeed him and has supported him throughout his tenure as CEO – until now.

It’s sad that it took nearly $1B US reasons for Bill to withdraw his support, but I honestly think it’s overdue.  As I mentioned, Ballmer has never understood Mobility or Mobile Computing. If he did, it’s clear that Windows Phone would have had a different product development path. Windows CE/Windows Mobile wouldn’t have hung around so long, and received such lack-luster internal support. Changes to Microsoft’s standard, PC platform would have come earlier than as part of Windows 8; and most certainly, Windows XP would have had a much different life cycle than it did.

Now, there’s a lot in that last paragraph that doesn’t necessarily deal directly with mobile computing, but a different mobile strategy would have effected a LOT more than just mobile OS and mobile devices at Microsoft.

At the End of the Day
I hope the new Microsoft CEO comes from outside the organization and brings a new point of view and mobile computing outlook to the organization. I hope that they understand what the consumer wants, what the enterprise will accept and isn’t afraid to put both chocolate and peanut butter together. While mobility isn’t ALL about CoIT at this time, it’s too much of a consideration not to have someone at the helm that doesn’t understand it.

What do you think? I’d love to hear your thoughts on this Microsoft development in the comments, below.

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What if – Microsoft Doesn’t Make it..?

I had an interesting conversation with someone at the office today who asked about the MS reorg and some Surface pricing changes – What happens if Microsoft shuts down?

msreorg

Its an interesting question, and one that made me, as well as some people around me and my friend, shudder – What if Microsoft doesn’t fare well after the reorg and everything continues to tank for them?  More than 80% of the world’s enterprises run on Microsoft clients and servers. What would happen if they just evaporated?

Now, I don’t want anyone to panic.  This isn’t very likely to happen, so don’t go getting your undies in a bunch.  However, when you start looking at how many businesses run MS software – servers, clients, middleware – it’s a legitimate question.  Where does the world turn if Microsoft and Windows dies?

Yeah… I’m at a bit of a loss too. I have no idea what viable alternatives are REALLY out there.  Now, assuming Microsoft is TOTALLY out of the picture (again, possible, but not probable…for now), some companies would likely adopt the same strategy with Windows 7 as they did with Windows XP and ride it as long as they could, hiring as many software engineers and developers to patch their enterprise implementation of the OS for all their clients as necessary. They’d have to do their own security patches, as again, MS wouldn’t necessarily be around 5-7 years from the finalization of their demise.

Thankfully, the problems at the OS level aren’t there when it comes to a productivity suite (meaning, Office).  There are many alternatives available, despite the fact that Office is the defacto choice at this time.  Things like LibreOffice, OpenOffice.org, and SoftMaker Office offer free or affordable, robust alternatives to Microsoft’s classic office suite, without imposing online, subscription restrictions or requirements on users. Regardless of what happens in Redmond, I don’t see this area being as big of an issue as the lack of Windows would create.  All three of the products I cited are MS Office compatible, AND have versions available for Windows, OS X, as well as numerous Linux distributions.

So what does this get us at the end of the day? Not much… The level of speculation here is crazy-huge.  But it’s one that a lot of people have had wander through their minds, especially at the large office I work in.  Many of the PC’s that are in use here today are still using Windows XP.  Windows 7 should be fully rolled out over the next 6-12 months – 4 years after its release in October of 2009.

If Windows were to evaporate, there’s no clear heir-apparent for an enterprise client OS out there.  OS X and Linux both have an enterprise presence, but its miniscule in comparison to what Microsoft has.  If I were Tim Cook or Jim Whitehurst (the CEO of RedHat) I’d be watching Microsoft like a hawk and step up the enterprise marketing at each and every opportunity.

My friend Preston Gralla says that MS has to kill the Windows brand to succeed. Greg Keizer, also from ComputerWorld, doesn’t give Ballmer a good chance of making the recent Microsoft reorg a success.  Part of that is Ballmer.  Part of that is clearly based on industry data of past reorg and culture change success rates.

The odds just aren’t in Ballmer’s favor; and any way you cut it, there’s definitely blood in the water. The only questions left to be answered are when and how badly will the shark attacks be…

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