There were tears when Steve Ballmer left Microsoft last year (the vast majority of them were his), but it was clear that whoever came in to replace the eccentric CEO of the once-dominant tech giants would have a lot of work on their hands to turn the company around.  When Satya Nadella took the reins there was much speculation about just how the company would evolve under him, and now, as we steadily approach a year of Nadella’s stewardship we are getting a clearer picture about the direction that Microsoft are heading in. 

 
 

Cloud Specialists

Microsoft were in danger of becoming a “jack of all trades, master of none” company towards the end of Ballmer’s time as CEO. Forward thinking companies like Apple and Google adapted much quicker to trends and found their place in the technology industry while Microsoft floundered. Nadella came in and stated his intentions to turn Microsoft into a cloud specialist and so far this has been a success. Increasing their cloud revenue by 128% in a year proves that they are on the right track, and according to MarketWatch, “mobility and the cloud are areas where the company will fail or succeed in the long run”.

Goodbye Nokia

How they have achieved this, and how Nadella plans to continue this growth is by streamlining their services and bringing their product lines together. Microsoft acquired Nokia earlier in the year, and with the latest release of the popular Lumia smartphone, the Nokia brand was killed off forever, replaced with the Microsoft branding. This will bring it in line with Microsoft’s other devices, like the surface tablets. The company has acquired a number of high profile businesses, and is gradually bringing them together to create distinct and recognisable divisions.

 
 

The next products that Microsoft are unifying are Skype and their instant messaging service Lync creating “Skype for Business”. Bringing them together, they will develop the platform, while simplifying the separate products. Lync allows people to communicate with colleagues and contacts within an organisation, but Skype for Business will allow calls to any Skype user on any device, while also changing the Lync interface to bring it in line with Skype’s.

Microsoft seem to be focused on combining “work and play”, and their subscription packages are beginning to show this. A recent subscription offer from Microsoft, which includes Office 365 Home, Xbox Live Gold, Xbox Music Pass, and Skype Unlimited World, is on offer for just $199 (which is a saving of over 50% for those services combined). This shows that while Apple has devices and Google has data, Microsoft want to control the cloud.

Nadella has acknowledged Apple and Google’s strengths, and seemingly has no intentions of trying to beat them at their own game. Although Microsoft have purchased their own mobile device business, the devices they’re producing retail for much less than Apple products. They are targeting the corner of market that use devices as a convenience, rather than a necessity as demonstrated by the low price points and slightly below average specifications.

A Streamlined Microsoft

What it appears Nadella aims to do is to streamline Microsoft. Not just in the way its products are delivered to consumers, but in the way the entire company operates. Departments are merging and employees are being made redundant. 18,000 Microsoft employees are currently being made redundant; the largest cull in the company’s history! Microsoft have been criticised for not recognising or adapting to changes in recent times, and now a clearer focus is needed in order for them to catch their competition.

Nadella has said “There is Windows, there is Office 365, and there is Azure. That’s it”. Those three things are what he sees as the core of the company. The implication is that any product, device or service that is introduced or retained is an extension to those three areas of the business. Big changes have been made in the last year, and more will be needed to continue Microsoft’s steady growth.

 

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