Microsoft new CEO Nadella: Good news, bad news and unknowns
Microsoft has a new CEO in Satya Nadella and like any leadership transition there are a bevy of unknowns even when you consider the software giant's new leader was considered to be a safe internal pick.
Nadella was named CEO on Tuesday with Bill Gates taking more of a technology advisory role. It remains to be seen if Gates' product role is more about public relations or actual development. In any case, Nadella's first talk as CEO indicated that software is the core of the company and Microsoft isn't hardware happy (despite the Nokia purchase).
Going forward, the big question regarding the Nadella pick is whether the safe choice was really the best option---or the only option.
Here's a look at the good news, bad news and unknowns about Nadella as he starts his new gig.
More: Microsoft goes internal: Satya Nadella is CEO | Reading between the software lines of Nadella's first CEO speech | Meet Microsoft's new board chairman John Thompson | Steve Ballmer: The Exit Interview | Microsoft Nadella announcement | Nadella's email to the troops
Good news: Nadella will provide continuity. Nadella has been at Microsoft 22 years and knows the company's enterprise cash cows well. He also knows the cloud.
Bad news: He's an insider and you could argue that Microsoft needs more shaking up. Analysts considered Nadella a safe pick. Safe isn't always the best course.
Unknowns: Will Nadella shake things up? Credit Suisse analyst Philip Winslow said:
We believe that multiple nearer-term options exist for Nadella to unlock shareholder value at Microsoft, many of which we believe Steve Ballmer had not been willing to execute, including (1) rationalizing the cost structure of the company, (2) potentially divesting/exiting underperforming/noncore businesses, (3) optimizing the capital structure (e.g., raising debt against off-shore stockpiles of cash), (4) increasing the level of buybacks/dividends, and/or (5) accelerating the shift to Office 365 (i.e., "pull an Adobe").
An outsider would have the honeymoon period to make some of those moves. Nadella may not.
Good news: Gates is more involved and will devote more time to the company as a tech advisor.
Bad news: Gates is more involved and will devote more time to the company.
Unknowns: Will Gates be an asset or liability to Nadella? Is Gates washed up from a product perspective?
Good news: Nadella is an enterprise guy and that unit makes all the money.
Bad news: Nadella may have the consumer product mojo to really make the company's Nokia bet pay off.
Unknowns: Can anybody make Microsoft's Nokia bet pay off?
Good news: Nadella is a technologists trade.
Bad news: Technologists struggle with user experience and design.
Unknowns: Will Nadella be able to provide a seamless and attractive Microsoft experience across all platforms?
Good news: Nadella knows the cloud and has established Microsoft as a real player.
Bad news: He has a big challenge threading the innovator's dilemma when it comes to preserving Office revenue and accelerating a move to Office 365.
Unknowns: Does Nadella have the air cover to move to the cloud faster and take the financial hit as soon as possible.
Good news: Nadella said that Microsoft has to be a mobile and cloud first company.
Bad news: Microsoft still has a ways to go in mobile.
Unknowns: Does Microsoft's tandem of Windows Phone and Nokia work for any leader?
Good news: Nadella seems to recognize there's a post-PC era.
Bad news: Microsoft's Windows franchise is still attached to PCs.
Unknowns: Have PCs sales bottomed? Does Nadella have what it takes to milk the Windows business while innovating?