Microsoft
settled on a veteran insider as its replacement for long-time CEO
Steve Ballmer on Tuesday, ending a five-month search with a choice some
analysts called a “safe pick” for the software behemoth.
India-born Satya Nadella, 46, head of the company's cloud computing
division and enterprise business, was appointed after a team of
headhunters concluded a five-month search that included some of the most
world’s most famous executives.
Nadella is only the third person
to lead Microsoft; since the company was founded 39 years ago, only
co-founder Bill Gates and Ballmer have headed it. But in recent years
the company has looked flat-footed as rivals Apple, Google and Facebook
have dominated and innovated in hardware, online services and social
media.
In a nod to Nadella's low profile outside the company, Microsoft introduced him with a sleek web page that was heavy on biographical details including the revelation that he relaxes by reading poetry.
Ballmer
said he would step down last August amid mounting criticism of the
company’s dependence on its Windows, Microsoft Office and workplace
software, products that have generated massive profits for the company
for decades but are being increasingly challenged by online
alternatives. In a statement, Ballmer said Nadella was “the right leader
at the right time” for Microsoft.
Some were less sure. In a
note to investors, analysts at FBR Capital Markets said the appointment
of Nadella was a "safe pick" compared to choosing an outsider. Microsoft
was among the first to innovate in areas like smartphones, tablets and
cloud services. But it has seen those ideas better executed by rivals
including Apple and Amazon, the note said.
As part of the
announcement, Gates said he would step down as chairman to assume a new
role on the board as founder and technology adviser. John Thompson, the
Microsoft board member who oversaw its search for a new chief executive,
becomes chairman. “During this time of transformation, there is no
better person to lead Microsoft than Satya Nadella,” Gates said..
“Satya
is a proven leader with hardcore engineering skills, business vision
and the ability to bring people together. His vision for how technology
will be used and experienced around the world is exactly what Microsoft
needs as the company enters its next chapter of expanded product
innovation and growth,” Gates said in his statement.
Nadella may
be little known outside of Microsoft’s sprawling Redmond campus, but
inside it he is a star. Before being named as CEO he ran one of
Microsoft's fastest growing divisions, cloud services. Revenue at the
division soared 107% compared to a year ago, the company said when it
reported its fiscal second-quarter results on 23 January. Most of his
experience is in serving corporate customers – the source of two-thirds
of Microsoft profits.
He has also been unafraid to speak his mind on sensitive issues. In December, speaking at the Le Web
conference in Paris, Nadella addressed the revelations of the NSA
whistleblower Edward Snowden, saying they demonstrated that “the
surveillance system has to be reformed”.
"Businesses and users are
going to use technology only if they can trust it," said Nadella.
"Clearly now it's the responsibility, I think, of governments – the US
government included – to restore that trust. The only mechanisms that I
think we have learned is that the respect for the liberties of people
and the rule of law is the one way to have societies thrive."
Microsoft's
decision to retain Gates worried some observers. Sydney Finkelstein, a
leadership professor at Dartmouth's Tuck School of Business, said there
were huge challenges ahead for Nadella. Finkelstein said making changes
within a company as large as Microsoft was difficult for any CEO, and
more so when the senior figures being replaced were, as in the case of
Gates, still playing a part.
“The next CEO needs to instil a
level of risk-taking and innovation,” said Finkelstein. He pointed to
examples of insiders shaking up big companies after the resignation of a
famous CEO – Bob Iger, for example, took over at Disney after Hollywood
legend Michael Eisner was forced out amid criticism that the the media
firm was losing its way to younger rivals. Iger went on to revitalise
Disney, buying Pixar and Marvel.
“But that’s much harder to do if the people who used to run it are still breathing over your shoulder,” said Finkelstein.
Finkelstein
also noted that before Nadella’s appointment, the top job at Microsoft
had been linked to a number of leading executives outside the company,
including Ford CEO Alan Mulally. “The fact that he is relatively unknown
outside Microsoft is interesting, especially in the light of the big
names that were associated with the job. It makes you wonder if he was
the first choice,” Finkelstein said.
James Staten, an analyst with
Forrester Research, was more positive. "Satya Nadella is a tough,
number-driven leader. [His appointment] will be a great thing for the
overall direction of the company," Staten said.
"Nadella is a
visionary, is making it happen, and knows what it takes to drive change
in the unique Microsoft culture. An outsider would have a hard time
accomplishing this coming in fresh. And time is of the essence."
In a statement about his hiring, Nadella called Microsoft “one of
those rare companies to have truly revolutionized the world through
technology,” and said, “I couldn’t be more honoured to have been chosen
to lead the company.
"The opportunity ahead for Microsoft is vast,
but to seize it, we must focus clearly, move faster and continue to
transform. A big part of my job is to accelerate our ability to bring
innovative products to our customers more quickly.”
Nadella joined
the company in 1992 and as well as heading cloud services, he also held
leadership roles in server software, internet search and business
applications. Born in Hyderabad, he holds a master's degree in computer
science from the University of Wisconsin, and a master's in business
administration from the University of Chicago.
Married for 22
years and with three children, he counts cricket and poetry among his
hobbies. In an email to Microsoft employees on Tuesday morning, he wrote
that he is “defined by my curiosity and thirst for learning.”
On the web page constructed for his announcement, Microsoft said:
Microsoft’s
new CEO finds relaxation by reading poetry, in all forms and by poets
who are both Indian and American. “It’s like code,” he says. “You’re
trying to take something that can be described in many, many sentences
and pages of prose, but you can convert it into a couple lines of poetry
and you still get the essence, so it’s that compression.” Indeed, he
says, the best code is poetry.
In
a video interview, Nadella said he was “honoured, humbled, excited,” by
his appointment. “We have tremendous opportunity and that’s exciting.
And I’m also grounded on our challenges. In fact that is the adventure
and the constraint that also creates, I think, the competitive zeal in
me to be able to do great work,” he said.
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