Microsoft has a new CEO. Microsoft has a new opportunity to remake itself. This much is obvious. With that said, if there are only two things for its new CEO, Satya Nadella, to do, it is these, how to handle Windows phone and what to do with Microsoft Office. These may seem like a highly compartmentalize problems, but they aren’t. When you look at these to do items, they actually encapsulate in as clear and stark form as possible, the strategic crossroads Microsoft finds itself in. You have to remember that Microsoft became a multi-billion-dollar company because it found a way to insert itself in the process of technological change. It used to be that chief information officers of major corporations have a lot of leeway regarding software products and software implementations that their enterprises would adopt. Well, Microsoft short circuited this process by using network control. By owning the operating system market and rolling out Microsoft office, Microsoft created an eco-system where it doesn’t pay enterprise CIOs and information systems managers to deviate from the eco-system. Microsoft needs only to say that it’s coming up with a software product addressing a particular niche for all competitors in that niche to dry up. That’s how powerful Microsoft was back in the early 90s.
Unfortunately, things have dramatically changed. The world is now more focused on open source systems and the traditional power base of Microsoft, which is its paid operating system is quickly disappearing. Why? Thanks to Android, Chrome, Linux, and even Mavericks by Apple, the operating system no longer needs to be a paid piece of software. Everyone from Google onwards is saying that the battle is not over the operating system. It is about the apps. It’s about the user experience, and it’s about the Internet. Well, Google wants the Internet to be the future. In other words, all devices should be connected to the Internet because that is where Google is strong. Apple, on the other hand, has a different vision. Its vision is that people would have Apple hardware to experience the Internet in a certain way. You can see the different competing visions here. What’s left out of the equation? Microsoft’s vision. Microsoft’s vision circa Steve Balmer is that all devices in the world would be running Windows of one flavor or another. Well, with the launch of Windows 8, we know that this vision has been a flop. People don’t want metro. People don’t want tile based screen systems. Microsoft is pretty much left scrambling.
This is where Satya Nadella starts. And it can really be boiled down into those two issues, Windows phone and Office. If he is able to solve these two problems and their underlying technology trends, then he would have successfully saved Microsoft from the dust bin of history. That is precisely what Microsoft is heading. It’s becoming irrelevant. It’s still making billion of dollars every single year. It still owns the Xbox and Skype but all those competitive advantages, and all those assets will go away as technology continues to change at warp speed. That’s why Satya Nadella needs to get on the horn and fix these issues immediately.