Satya Nadella's brave new strategy: Can Microsoft execute?

Moderated by Larry Dignan | August 4, 2014 -- 07:00 GMT (00:00 PDT)

Summary: Six months into his tenure as CEO, Satya Nadella is already having a significant impact on Redmond's complacency. We debate the prospects for Nadella's Microsoft.

Ed Bott

Ed Bott

Yes

or

No

Steven J. Vaughan-Nichols

Steven J. Vaughan-Nichols

Best Argument: No

66%
34%

Audience Favored: Yes (66%)

Closing Statements

Bet against Microsoft at your own peril

Ed Bott

If you feel like you stepped into a time machine during this debate, it’s not your imagination.

My opponent’s perceptions of Microsoft were formed decades ago, and nothing’s going to dislodge his outdated prejudices.

So please allow me to focus the argument back on the central question of this debate: Can Microsoft execute on Satya Nadella’s strategy?

Yes, they can. This is a company that has done remarkable things with Azure and Office 365, which are only two of the 16 billion-dollar businesses at Microsoft. My opponent’s loathing of Windows 8 is so profound that he forgets that Windows is no longer the primary profit engine at Microsoft. Windows 8 is a fraction of just one of those billion-dollar businesses.

For the past five years, Microsoft has been building an enviable cloud-based portfolio under the leadership of the man who is now CEO. Bet against him at your own peril.

Right guys can finish last

Steven J. Vaughan-Nichols

Nadella is the right CEO for Microsoft. He has a vision and the engineering and leadership chops to make it happen.

What I don't think he has is time.

Under Ballmer, Microsoft's squandered its strategic advantages. Today, people still think of Microsoft as the Windows PC company. That was fine in the 00s, but we're in the 10s now. Today, Microsoft is the Windows 8.x's company. Yuck!

Microsoft's in-house mobile efforts have come to nothing. Bringing Office to other platforms, far from enabling Microsoft to "start printing money," appears -- according to Jan Dawson, chief analyst at Jackdaw Research  -- to have gone nowhereMicrosoft is only one of many cloud players. Azure is good, but better than OpenStack, AWS? No.

Ed worries that Microsoft can't connect with consumers or new business leadership, and about Google's competition. He's right to worry. All three factors will add up to Microsoft becoming a dull legacy company.

The challenges are formidable.

Larry Dignan

The question that anchored this debate was almost impossible to answer without a crystal ball. In theory, Microsoft can execute and everyone seems to be rooting for CEO Satya Nadella. What's unclear is whether Microsoft will be able to execute. The challenges are formidable.

Overall, Steven Vaughan-Nichols won the argument by a slim margin over Ed Bott. Both had solid arguments and the two debaters actually agreed (for once) that Azure was strong. The argument that Nadella's challenges outweigh his support and time window won out. After all, there are a lot of fix-it jobs to do after Steve Ballmer.

Vaughan-Nichols gets the win. 

Talkback

78 comments
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  • Progress is already being made in this direction

    The cloud services are going to keep growing and the current trend of mobile apps to every platform is already well underway. While Windows Phone isn't a towering success, it is a great OS. Whether or not it ever gains a sizable market will matter less as Universal apps become more standard for developers.
    grayknight
    Reply 6 Votes I'm for Yes
    • MS Has Demonstrated An Unwillingness To Change...

      Satya walked into a lion's den. If he tries to change MS the old guard will do everything possible to make his days as CEO short lived.

      If he doesn't do enough to please the share holders they will call for his head.

      This is known colloquially as a "Lose-Lose Proposition".

      Personally, I think the only reason he's CEO is because nobody else wanted to be in the hot seat.
      orandy
      Reply 9 Votes I'm Undecided
      • Your posts are a joke

        You're just a MS hater. Nothing here, folks. Just move on.
        ahy-nonimous
        Reply 11 Votes I'm Undecided
      • Don’t underestimate Microsoft

        Here's Why :

        Microsoft is frequently criticized for being late in adapting to the smartphone/mobility trend. In some areas, Microsoft is suffering from success. The large installed base using both Windows and Office resist change, simply because change requires a new learning curve. But Microsoft is currently resisting the temptation to be held back by this inertia, and is positioned to do better than most expect, even rising to parity with Apple and Google in mobile devices and search.

        Apple has shown the way in smartphones, of course, but in a way that has limitations. They have a separate smartphone and PC OS, and their focus with iOS has been on using Web information and services, not productivity applications. Google’s Android, like iOS, is limited to mobile devices, and Google’s support of PCs is largely through the Web browser with Web search. The limitation of this dual approach is that, ultimately, users will want as much of the functionality they enjoy on their PC always available on their mobile device, without a significant learning curve.

        This desire will be further driven by companies increasingly supporting internal business applications through mobile devices, the “consumerization of IT.” Both Google and Apple have minimal experience supporting enterprise IT compared to Microsoft.

        Today, Microsoft is leading the way toward the convergence of PC and mobile functions with an OS that is essentially the same on PCs and mobile devices. Microsoft.s being late to mobile has indirectly been an advantage, in that they are entering the fray at a point where the computing capabilities of the mobile devices have reached the point where they can support more complex operating systems, an option not possible when iOS and Android were launched. Microsoft also supports its market-leading productivity applications on mobile devices by strategies such as accessory keyboards tightly integrated with their tablets and the cloud-based Office 365.

        Microsoft also has an entry in the search space through Bing, and Apple’s Siri defaults to Bing rather than Google when it can’t answer an inquiry directly. And the active tiles in Windows 8, with proactive notifications, are a less-intrusive competitor to Google Now.

        Microsoft is coming from behind in mobility, but it is notable that they have an entry in all the key areas. Microsoft has invested for decades in technologies such as speech recognition and natural language understanding, and has the core technology to move ahead strongly in areas becoming increasingly important such as voice interaction in automobiles and with mobile devices. The company even has an early and strong entry in Smart TVs through its Xbox franchise, which it is turning into a full entertainment interface supporting both gesture and voice control.

        Intelligent interfaces such as personal assistants could unify much of this diversity of devices, applications, and Web services. Microsoft not only has core capabilities in intelligent interfaces, but upper management has publicly endorsed such interfaces as strategic priorities under the heading of “machine learning.”

        Microsoft may be coming from behind in some areas, but they have the horsepower and resources to catch up. Their unified approach to PCs and mobile devices and top-level endorsement of machine learning might even be categorized as showing leadership. If Microsoft’s long-term vision is the right one, we might be asking in a few years why Apple and Google didn’t see it.
        Anonymous1511
        Reply 9 Votes I'm Undecided
        • Couldn't agree more!

          I'd only add that Microsoft is a good marketing campaign from being really competitive in the consumer space occupied by Apple. My family and I invested in Surfaces (ARM versions) and are quite happy with their performance and, most importantly, consistency and portability across devices. Our Xbox One uses the same login as our Surface Tablets and Lumia phones, syncing to our OneDrive accounts without a hitch. If I were to lose or damage my Surface, I simply log into any Surface connected to the cloud and my settings automatically follow me. It's amazing stuff.
          idenchasy
          Reply Vote I'm Undecided
      • Structure within Microsft has already been changed

        and changed further with the layoffs. Microsoft has been changing and is no longer what it was. Need proof? Windows Phone is getting updates at a faster pace, Windows is getting updates/changes at a faster pace, Azure is regularly updated, Office 365 is updated. Microsoft is now a much faster company than it was 10 years ago.
        grayknight
        Reply Vote I'm Undecided
      • Your as moronic as SJVN. And thats a bad thing.

        Just below I have reproduced the single most telling comment in SJVN's position:

        "Microsoft … the productivity and platform company for the mobile-first and cloud-first world" assumes that Microsoft can become a mobile and cloud powerhouse. Why should we believe that?"

        This is a real "prime cut" of SJVN's thinking of when it comes to Microsoft. The perfect example why he never really quite gets anything right about Microsoft. Even when he jumps onboard some anti-Microsoft gravy train that appears to have already left the station, he always needs to take it much farther then logical minds would suggest is reasonable.

        "assumes that Microsoft can become a mobile and cloud powerhouse. Why should we believe that?"

        Well, lets just start this off. As SJVN really gives no reason at all why we shouldn't believe that, unless you count his pointing out that Android was on 85 percent of smartphones sold in the last quarter and Windows phone was 35, and if you think that for some reason that is where such an argument begins and ends, you live in a very weird world and probably shouldn't be commenting on IT matters at all.

        Go to any successful and responsible CEO in the world and say, "although we are a top line major player in this industry, we cant become a powerhouse in the new direction the industry is taking because another company has 85% of the market and we currently only have 3%".

        Ya. Go ahead and say that. You will probably get something lopped off your body you may want access to later in life. Ridiculous.

        Just ad into that the fact that in this particular industry, that of IT generally, mobile platforms is where the future is going to largely be 20 years from now. Most computers that are not considered mobile will probably be some monster of a thing in a nitrogen cooled room doing calculations for time travel. Otherwise bet your bottom dollar that eventually you will be carrying around a device that will do anything and everything and when doing any 'heavy lifting' will simply be dropped into a docking system for convenience. However that docking system of the future may work.

        Despite the claims of SJVN, Microsoft is definitely not stupid. The Microsoft haters might just as well face that reality if they prefer working with real knowledge and truth as opposed to simply hating and wishing. Knowledge is indeed king, keep it in mind if you like getting as close to the right answer in life as possible.

        Microsoft understands completely where we are headed long term, and that is eventually when hardware is up to the task, a completely mobile cloud based computing environment. There is no mistaking this, they are working full time in cloud development right now and coming up with clever ways to gradually ease us into a cloud based computing environment. If you don't think they will make it happen then you are again dreaming. It will happen.

        Someone who comes onto ZDNet and basically starts saying they don't think Microsoft will make it in mobile is essentially saying Microsoft is going to be finished as the company they are today in the very near future. Billions on billions of dollars worth of massive top tier IT enterprise go down the tubes. Unless of course Microsoft becomes a widget maker or something different to save the last vestiges of the company before it all goes down the drain.

        And sure, obtuse and biased people like SJVN will sit around and say "sure, that could happen, why cant Microsoft go belly up? Any company can." Firstly, if you just go around saying any company can go belly up, again your simply showing your lack of business and economics credentials. And, its one of those situations where if you think those kinds of things your so uneducated on the subject you have no clue just how poorly educated you actually are on the subject. Some companies, if they were to go belly up would have some catastrophic ripple effects generally throughout the world and Microsoft is one of them. Im not going to take up another 5 paragraphs explaining that, if you just don't get it, have someone explain it to you that does understand it.

        Microsoft is highly unlikely to run out of money pursuing the mobility/cloud goal. If you don't understand why, again its just a fact, get someone to explain it to you. Microsoft is massively driven to succeed in this area, to not do so would be disastrous and there is no reason that with enough time and money they couldn't succeed, unless your some kind of moron who just figures that if Google is leading, it, unlike any other market leader in various industries around the world, that the market leader can never be broken in mobile. Its highly unlikely in almost any case that its impossible to break a market leader in almost any industry, and where it becomes more possible than ever is when the competition is already entrenched in the industry generally and has vast monetary and R&D resources to draw upon. And, as in this case is motivated to the highest possible levels.

        These things should be quite evident, obviously evident. They are not even complex theoretical business ideas, they are practically little more that obvious tried and true realities of life. Even the likes of biased SJVN must know these realities about business and the IT industry generally.

        Thus, SJVN asking "...assumes that Microsoft can become a mobile and cloud powerhouse. Why should we believe that?" Is a ridiculous question. You should obviously assume they could become a powerhouse because they have boatloads of money, decades of experience in the industry, resources of every kind and more determination and motivation to get the job done then any man who has to either sink or learn how to swim. That's why. What stupidity to ask "why should we believe that?" when the most obvious and simple reasons are right in front of the very eyes of anyone who has even a meager understanding of the IT industry.

        And in particular, when the best ideology SJVN seems to use for thinking Microsoft cannot become a powerhouse in mobile is because right now Google is and Microsoft definitely in not. That's a great argument if he was talking about a company with shaky financial underpinnings and little experience in the industry with only reserved motivations about success. It ridiculous when made about Microsoft and their very future in the IT industry.

        Want to know WHY we should believe they will make it? Because there is actually an easy "how they will make it". And they are already on their way down that very road.

        We know, again, as fact, that Microsoft is heavily into cloud computing development and integrating operating systems between platforms. We know that mobile is the future and we know hardware is still advancing, particularly miniaturization for mobile applications.

        In case there is still anyone out there who dosnt know what this means Microsoft intends to do..I will tell you.

        In about a dozen years from now, give or take, your entire Windows desktop environment, if they still call it Windows then, they might, will be on some device as powerful or more powerful then todays top of the line full desktop quad core (or more) system with scads of ram and a high end GPU, in a device that's small enough to be a smartphone. In whatever configuration will provide for that kind of performance in the future.

        With the assistance of full on cloud computing you will gradually find the Windows desktop you will still be relying on for work and play at home is suddenly all in a device that you take with you. And, it will be able to act as a mobile communications device as well obviously. And at that point, your desktop will indeed become your phone and its all in one. It seriously diminishes the need for any kind of stinky old Android phone if your bringing your entire Windows computer with you and its already a phone clipped to the inside of your coat.

        That's how Microsoft could become a mobile powerhouse and its not by coincidence that's exactly where they are headed and are in the early stages of the groundwork for the future transition to this kind of computing world.

        SJVN. Wow. The things he writes are astounding. How anyone can say he had the better argument is beyond comprehension. Anyone who said that has to be as blind to reality as he is.
        Cayble
        Reply 2 Votes I'm Undecided
        • I've come to believe SJVN to be a fake

          Seriously, if he's really that entrenched in the technology he discusses on, then even he has to know the silliness of much of the stuff he says.

          If he really does believe the stuff he says and is being sincere, well then, maybe he should take off the blinders, look around, learn some things about the century he's living in.

          LOL! What am I saying? Sorry, had a moment there....
          William.Farrel
          Reply Vote I'm Undecided
  • Sorry SJVN but your analysis is lame.

    The only android player who matters is Samsung. Number 1 or number 2 (depending on whether you are talking to Apple or to Samsung).

    I've read 4 percent for Microsoft but either way, that is still #3 in the smartphone camp - with severely-crippled BlackBerry at #4.

    Neither Google nor Amazon want to put their resources up against Microsoft (who can out-spend and out-litigate them).

    No one seems to take the Surface Pro 3 seriously - EXCEPT APPLE who has aggressively lowered the price and raised the specifications of the popular MacBook Air (and more recently the MacBook Pro). Why would Apple do that if they didn't believe that the Surface Pro 3 was a serious competitor.

    Then there is the cloud. Sure, AWS got a good head start on Microsoft. It's the same with the Kindle Fire tablet. So did Apple, with the iPad. So?

    No matter how you slice it, the cloud is spread out through enterprise machine rooms all over the world. Whether those machine rooms are running Azure, or Citrix, or VMware. The bulk of them are running Windows Servers. Many others are running Linux servers.

    NONE are running Android servers, none are running Apple servers.

    In the end, even if Microsoft stays right where it is in smartphones (#3) and in tablets (#3? #4? #5). Microsoft will dominate the cloud for the foreseeable future.
    M Wagner
    Reply 10 Votes I'm for Yes
    • You made a mistake

      Others do it a lot of times.
      Android OEMs are not the equivalent of Microsoft in the Windows ecosystem. They are the same as HP, Lenovo, Asus, Acer, ... How much money do they make there? A fraction of the money OEMs make with android I'm sure (I don't have numbers, I might be wrong, but don't think so). Lenovo made an average of $7 for each laptop sold! (after operation expenses).

      If surface or smartphones devices or even mobile ecosystem penetration are fundamental for the new Microsoft, I think they will struggle... but I don't think they need it to succeed (and they need to deliver services for those platforms, they just don't need to own it).

      Any Apple competitor has close to zero chances of succeeding in the high profitable market, without numbers Nokia and Surface brand will be money losing machines for the years to come.
      AleMartin
      Reply 3 Votes I'm Undecided