TIME Companies

Honda Ousts CEO in Management Shakeup

Honda Motor Co's incoming President and Chief Executive Officer Takahiro Hachigo and outgoing President and CEO Takanobu Ito attend a news conference at the company's headquarters in Tokyo, Feb. 23, 2015.
Yuya Shino—Reuters Honda Motor Co's incoming President and Chief Executive Officer Takahiro Hachigo and outgoing President and CEO Takanobu Ito attend a news conference at the company's headquarters in Tokyo, Feb. 23, 2015.

Aggressive sales targets, safety issues and stock performance led to the shakeup of Honda's leadership

Honda’s chief executive since 2009 is out following a series of quality and efficiency problems that called into question whether he might have been pushed the Japanese automaker too hard and fast.

The removal of Takanobu Ito from the top post was part of a broad management shakeup, in which several key executives worldwide will be replaced in senior posts. “I felt this was the right timing for us to boost efficiency and results globally,” Ito, 61, told reporters.

The company’s loss of momentum in the U.S., its most important market, may be its biggest headache. Accordingly, the latest shakeup includes the departure of Tetsuo Iwamura as chairman of the American Honda Motor Company. He will remain a director of Honda – but no new chairman will replace him. Instead, Takuji Yamada, president of American Honda, will assume his duties.

Ito will be replaced in June by Takahiro Hachigo, 55, an engineer who currently serves in a senior post in Honda’s research and development arm in China. Ito, 61, will continue to serve as an adviser to the company.

Honda shareholders and fund managers may have played a part in the change. In the past five years, Honda shares have returned 27% to holders, lagging well behind the Nikkei 225 Index, which returned 82%. Nissan shares returned 66%; Toyota shares 146%.

American Honda, once a phenomenon in the U.S. that set standards for customer satisfaction, has become known for reliable, unexciting models that lack distinctiveness. Their lead in quality over models built by Detroit, meanwhile, has narrowed or disappeared as U.S. and European automakers have improved their offerings.

Lately, Honda has taken steps to make their styling and design more expressive, as evidenced by a new Pilot crossover that will appear this summer. The new Pilot is a departure from its boxy, utilitarian predecessors. Honda also introduced a new Acura NSX supercar, another step in what the automaker is calling “The Year of Honda” in the U.S., in an attempt to highlight improvements and innovations.

The automaker has been under a cloud due to quality problems with its Fit hybrid subcompact, which was recalled five times as of last October. Honda also set aside hundreds of millions of dollars to cover expected damages due to mass recalls of its cars equipped with Takata Corp. air bags that have been linked to six deaths.

Ito has conceded publicly that quality problems with Fit may have a connection to sales targets for the model that were too aggressive. Meanwhile, Honda lost market share last year in the U.S., as its top Japanese rivals, Toyota and Nissan gained. Like Toyota, Honda has been reorganizing operations to move more authority and responsibility from Japan to regional centers around the world.

Hachigo, described as a broadly experienced executive, jumped several levels in executive rank to his new job. He had worked on development of the Odyssey minivan and CR-V crossover.

This article originally appeared on Fortune.com.

Read next: Here’s Why Russia Is Cracking Down on Google

TIME Companies

Going to Disney World Just Got More Expensive

A statue of Walt Disney and Mickey Mouse stands in front of
Bloomberg/Getty Images

Tickets pass the hundred-dollar mark

Entrance into the happiest place on Earth just got pricier.

The Walt Disney Co. on Sunday upped the ticket prices to all of its U.S. theme parks by $3 to $6 a ticket. While a single-day ticket at the Walt Disney World’s Magic Kingdom in Orland, Fla., used to cost $99, this week the price broke the hundred-dollar barrier to $105. One day tickets to Disneyland in Anaheim, Calif., now costs $99 for the 10-and-over crowd, up from $96. Prices also increased for children.

The parks’ prices usually increase annually, Disney spokesperson Suzi Brown told the Associated Press: “We continually add new experiences, and many of our guests select multiday tickets or annual passes, which provide a great value and additional savings.”

In the final quarter of 2015, Disney parks saw a record attendance bump of 7%.

TIME real estate

Americans Are Running Out of Office Space

office space
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And running out of privacy, too

Companies looking to trim the fat are looking to people’s workspaces, according to a new report, leading to a decline in in personal space and privacy at work, even among some corporate employees used to spacious offices.

“Every client we talk to, they’re using less space per person,” Kenneth McCarthy, an economist at the commercial real estate broker Cushman & Wakefield, told the New York Times.

The average space per North American worker in 2012 was 176 square feet, down from 225 in 2010, according to commercial real estate association CoreNetGlobal, and it’s expected to drop to 151 square feet in 2017.

Read more at the Times

Read next: How to Deal When Your Company Moves to an Open Floor Plan

TIME Regulation

Obama Calls for Tighter Rules on Retirement Account Brokers

President Obama addresses the General Session of the 2015 Democratic National Committee Winter Meeting in Washington, DC, on Feb. 20, 2015.
Nicholas Kamm—AFP/Getty Images President Obama addresses the General Session of the 2015 Democratic National Committee Winter Meeting in Washington, DC, on Feb. 20, 2015.

Many people provide investment advice, but not all of them are required to disclose potential conflicts of interest

(WASHINGTON) — The Obama administration is proposing tougher restrictions on brokers who manage Americans’ retirement accounts, reigniting a confrontation with the financial services industry over rules affecting trillions of dollars in 401k and other savings accounts.

The change would put brokers — who sell stocks, bonds, annuities and other investments — under the stricter requirements for registered financial advisers when they handle clients’ retirement accounts.

In a long-anticipated move, the Labor Department is making the proposal Monday to the White House Budget Office. After an internal review, it likely will be put out for public comment for several months.

The rule has been the subject of intense behind-the-scenes lobbying, pitting major Wall Street firms and financial industry groups against a coalition of labor, consumer groups and retiree advocates such as the AARP.

The administration first proposed a regulation in 2010, but pulled it back following an industry outcry that the proposal would hurt rather than help investors by limiting choices.

To buttress the new effort, the White House on Monday is releasing a report from its Council of Economic Advisers that concludes investors lose billions of dollars because of brokers’ conflicts of interests. Obama was scheduled to address the AARP later Monday to draw attention to the plan.

“When you go to a doctor or a lawyer, you expect the advice you get to be in your best interests. But the same doesn’t always hold true in the world of retirement savings,” Labor Secretary Tom Perez said in a conference call with reporters. “Many financial advisers have taken an oath to serve your best interests, but there are other financial advisers and brokers who provide critical financial advice every day and are not obligated to look out for your best interests.”

Americans increasingly are seeking financial advice to help them navigate an array of options for retirement, college savings and more. Many people provide investment advice, but not all of them are required to disclose potential conflicts of interest.

Under current rules, brokers are required to recommend only “suitable” investments based on the client’s finances, age and how much risk is appropriate for him or her. The rules would make brokers handling retirement accounts obligated to put their clients’ interests first.

The chairman of Obama’s Council of Economic Advisers, Jason Furman, pointed to academic studies that conclude investors who receive such recommendations sustain a 1 percentage point lower return on their retirement savings, totaling losses of $17 billion every year to middle-class families.

Industry officials dispute those studies and say the industry is well governed by financial regulators like the Securities and Exchange Commission. They say the Department of Labor is ill suited to write rules best left to agencies more familiar with the financial industry.

“You have the Department of Labor, which really doesn’t know this area,” said Ira Hammerman, general counsel for the Securities Industry and Financial Markets Association, the brokerage industry’s big lobbying group. “Our concern is they are not going to get it right, just like they did not get it right in 2010.”

Meanwhile, the SEC is studying the broader investment advice industry to determine whether it should come under further regulations. Critics of the Labor Department effort say the Obama administration should leave the regulations to the SEC or it will risk limiting the advice available to investors with relatively small retirement savings.

“Investors benefit from choice; choice of products, and choice in advice providers,” SEC Commissioner Daniel Gallagher, a critic of the Labor Department proposal, said in a speech Friday. “This is something the nanny state has a hard time comprehending.”

Perez and Jeff Zients, director of the White House National Economic Council, said administration officials have been consulting with SEC Chairman Mary Jo White, financial industry officials and consumer groups.

Zients said the proposed rule would be “very different” from the restrictions the administration proposed in 2010.

“Much has been learned since then,” he said.

TIME Taxes

Most Americans Say the Rich Aren’t Taxed Enough

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And many claim the middle class pays too much

Tax season is here and more than two-thirds of Americans think the wealthy pay too little in federal dues, according to a new poll. What’s more, six in 10 say the middle class pays too much.

The Associated Press-GfK poll, which comes in the wake of President Barack Obama’s proposals in his 2016 budget to raise investment taxes on high-income American families, found overall that 56% of respondents think their own federal taxes are too steep.

It also found widespread support for specific tax-raising measures: A bid to raise capital gains taxes on households with incomes greater than $500,000 saw support at 56%, while only 16% opposed it. And a new tax on banks was supported by 47%, while only 13% opposed it.

The estate tax did not fare as well. Thirty-six percent opposed what would require estates to pay taxes on inherited assets, while 27% approved. Despite the poll’s apparent show of support for the President’s proposals, none are expected to win the support of the Republican-controlled Congress.


TIME Companies

Visiting the ‘Happiest Place on Earth’ Now Costs a Little More

Jae C. Hong—AP People take pictures in front of the Sleeping Beauty's Castle at Disneyland, Jan. 22, 2015, in Anaheim, Calif.

Single-day tickets for the Magic Kingdom are up $6

(LOS ANGELES) — Visiting Mickey and Minnie just got more expensive.

Walt Disney says it has raised ticket prices to attend Disneyland, Walt Disney World and the rest of its U.S. theme parks, effective Sunday.

A one-day ticket for either Disneyland or California Adventure in Anaheim, California, is now $99 for anyone 10 or older. That’s up from $96.

Single-day tickets for the Magic Kingdom at Walt Disney World in Lake Buena Vista, Florida, are now $105, up from $99.

A one-day ticket to Disney’s other central Florida theme parks — Epcot, Disney’s Hollywood Studios and Disney’s Animal Kingdom — are $97, up from $94.

For children under age 10, a single-day ticket is $93 for Disneyland, $99 for the Magic Kingdom and $91 for the other theme parks.

TIME stocks

Stocks Close at Record Highs as Greece Gets a Bailout Extension

Andrew Burton—2015 Getty Images A trader works on the floor of the New York Stock Exchange during the afternoon of Feb. 13, 2015 in New York City.

Greece has reached a deal with Eurozone finance ministers to extend its financial bailout by another four months

U.S. stock indexes soared to new record highs Friday after Greece reached an agreement with Eurozone officials to extend the struggling country’s bailout by four months.

Both the Dow Jones industrial average and the S&P 500-stock index climbed to new intraday record highs in afternoon trading on news of the Greek deal, which extends the country’s financial rescue for another few months. Investors around the globe have shown their concern over the possibility that an extension could not be reached, which could have sent Greece into bankruptcy and resulted in the country withdrawing from the Eurozone.

The Dow and the S&P index both closed at new record highs.

Greece’s deal with a group of European financial ministers requires that the country submit by Monday a list of fiscal reforms its government plans to enact as part of its bailout agreement, Reuters reported. Greece’s creditors will have until the end of April to approve the policy measures.

In the U.S., the stock market reacted to news of the bailout extension with a swift rebound after an early morning sell-off. The Dow dropped more than 100 points in early trading on investors’ concern over the European negotiations. However, the blue-chip index ended the day in record territory, gaining some 0.9%. The index topped its previous record close, which it reached at the end of December.

Meanwhile, the benchmark S&P 500 captured its third record close in the past week by gaining 0.6%. The index, which crossed the 2,000-point mark for the first time ever last summer, finished just a handful of points above the previous record close it posted earlier this week.

The Nasdaq composite also improved Friday. The tech-heavy index has climbed to its highest levels in about 15 years and is steadily closing in on its own all-time high of 5,132 points, which it hit in 2000 before the dot-com bubble burst.

Friday’s gains cap off yet another strong week for U.S. stocks, which started off 2015 in rough fashion with overall losses for the month of January. February has been another story, though, as the broader market rebound has erased each of the major indices’ yearly losses. Just ahead of closing Friday, the Dow was up 1.8% for the year while the S&P 500 had gained 2.5% this year. The Nasdaq was up 4.6% on the year.

The Greek bailout extension came after the close of European markets, but London’s FTSE 100 and Germany’s DAX each gained about 0.4% on the day.

This article originally appeared on Fortune.com.

TIME Careers & Workplace

These Are the Worst Paying Jobs for Women

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Research found that pay gaps between men and women are often wider in traditionally high-paying occupations

A full-time female employee earned 82.5% of what a man earned in 2014, up considerably from 1979, when women made an estimated 62% of what men did. While this is certainly an improvement, progress has slowed between 2000 and 2014.

In many of the largest occupations in the country, women earn close to what men do on a weekly basis. In others, however, the disparity remains closer to the 1979 levels. Median weekly earnings among female workers in all of the 10 occupations with the widest gender pay gap were less than three-quarters of what males earned. The typical female personal financial advisor brought in just 61.3% of her male counterpart’s earnings in 2014, the widest pay gap among all occupations reviewed.

Based on the Current Population Survey from the Bureau of Labor Statistics, 24/7 Wall St. identified the 10 occupations where the median weekly full-time earnings among women was the smallest as a percent of men’s earnings.

According to Ariane Hegewisch, a study director at the Institute for Women’s Policy Research, pay gaps between men and women are often wider in traditionally high-paying occupations. Six of the 10 occupations with the widest pay gaps had median weekly earnings of more than $1,100, and were all among the higher weekly earnings figures.

These relatively high-paying jobs tend to have much more flexible pay packages that can include such extra incomes as commissions, bonuses, and merit pay. These advantages frequently favor males over females. Six of the 10 occupations had commission-based pay structures, available bonuses, merit-based pay such as tips, or a combination of the three.

These extra earnings are most common in financial occupations. Personal financial advisors, financial services sales agents, and financial managers all had among the 10 worst pay gaps, as well as relatively high median weekly earnings for men and women. The more forms of extra earnings available, Hegewisch explained, “the more scope there is for bias and discrimination.”

How well-represented females are in a particular occupation’s workforce is also a factor contributing to the pay gap. The occupations with the smallest pay gaps tend to have higher proportions of female workers. Alternatively, in six of the 10 occupations with the worst pay gaps, females were a minority of the workforce in 2014.

Hegewisch explained that men working in occupations with fewer men experience less discrimination than women working in male-dominated fields. Discrimination can take several forms. For example, it can be direct when a person is treated differently based on a personal characteristic protected by law. Discrimination can occur indirectly, when a practice or condition is implemented that will have the effect of illegitimate discrimination.

The gender composition of the workforce has changed over the last several decades, but the demands of both career and motherhood remain the same. Jobs such as doctors pay women less in part because women often choose specialties that require fewer hours and can accommodate family responsibilities. For example surgeons, who can “work 80-hour weeks, or 14 hours in a stretch” and receive more money as a result, are disproportionately men, Hegewisch said.

However, even where females seem to dominate a speciality — such as pediatrics — they still earn less than male doctors, according to a 2010 report from the Center for Research on Gender in the Professions. And, the Center concluded, “Women also earn less than men in the higher paying specialties. For example, women gastroenterologists make 79% of what their male counterparts earn.”

To identify the 10 occupations with the largest gender wage gap, 24/7 Wall St. reviewed the U.S. Bureau of Labor Statistics’ release of earnings data from the Current Population Survey (CPS) for 2014. The data are based on weekly earnings of both men and women working at least 35 hours a week year-round. We considered only occupations not broken out into more specific categories by the CPS. We also excluded those occupations not found in the BLS Occupational Outlook Handbook (OOH). As the BLS explained, the OOH provides much greater detail and more data for occupations.

These are the jobs with the largest pay gaps between men and women.

10. Driver/sales workers and truck drivers
> Women’s earnings as pct. of men’s: 73.7%
> Women median weekly earnings: $545
> Men median weekly earnings: $739
> Number of workers: 2,658,000

There were more than 2.6 million delivery truck drivers and driver/sales workers in 2014, one of the largest occupations in the nation. The job was also predominantly male. Just 4% of such drivers were female in 2014, nearly the lowest proportion among all occupations. As Hegewisch explained in an interview with 24/7 Wall St., women are often expected to take on more family responsibilities, which often prevents them from taking such jobs. Truck drivers are frequently on the road for long stretches at a time, and work demanding hours. The low percentage of females entering the truck driving profession may account in part for the wide pay gap. Women earned 73.7% of what male drivers made in 2014, the 10th largest pay gap among occupations reviewed.

9. Real estate brokers and sales agents
> Women’s earnings as pct. of men’s: 73.3%
> Women median weekly earnings: $726
> Men median weekly earnings: $991
> Number of workers: 416,000

Real estate brokers are usually licensed to manage their own real estate businesses, while sales agents usually work with a broker. Both facilitate real estate deals between property owners and interested parties and are usually paid commissions. A typical female real estate broker earned $726 per week in 2014, less than 74% of the median weekly earnings of men. This was the ninth largest gender wage gap among occupations reviewed. By contrast, full-time female workers across all occupations earned 82.5% of what men earned nationwide. Although less male-dominated professions tended to have less pronounced wage gaps between men and women, this was not the case in this profession. While 55% of real estate brokers and sales agents were female in 2014, the pay gap was still among the worst nationwide.

8. Bartenders
> Women’s earnings as pct. of men’s: 72.4%
> Women median weekly earnings: $459
> Men median weekly earnings: $634
> Number of workers: 216,000

Wide pay gaps between men and women are prevalent in traditionally high-paying occupations, yet bartenders are not especially well paid — as is the case in most restaurant jobs. Bartenders’ median weekly earnings of $522 in 2014 were lower than the majority of occupations reviewed. A typical female bartender earned $459 a week, 72.4% of the median weekly earnings among men in 2014. The pay gap among bartenders has also widened considerably more than most occupations since 2005, when women earned 98.8% of what men earned. Last year, 52% of bartenders were women, one of the higher proportions among occupations reviewed.

7. Human resource managers
> Women’s earnings as pct. of men’s: 71.2%
> Women median weekly earnings: $1,300
> Men median weekly earnings: $1,827
> Number of workers: 234,000

Human resource managers oversee an organization’s hiring process and related administrative functions. More than three-quarters of human resource managers were women in 2014, one of the highest female workforce compositions among all occupations. Women in the profession were also relatively well paid, with median weekly earnings of $1,300 in 2014, the seventh highest such figure among women. Yet male human resource managers earned significantly more — with median weekly earnings of $1,827 in 2014, it was one of the highest weekly paychecks among men in all occupations.

6. Retail salespersons
> Women’s earnings as pct. of men’s: 70.3%
> Women median weekly earnings: $491
> Men median weekly earnings: $698
> Number of workers: 1,870,000

The largest pay gaps tended to be in high-paying occupations. Retail sales jobs, however, which require low levels of education, were one of the worst paying. The median weekly pay for both sexes in the occupation was $596 in 2014, one of the lower figures among all occupations. While a typical salesman earned $698 per week, a typical saleswoman earned $491 per week in 2014, or 70.3% of what men earned. This was the sixth largest pay gap, although it had improved substantially from 2005, when women earned 66.2% of what men earned. The improvement in the occupation was better than that of the nation. Women also made up a minority of salespeople in the United States last year. Of the nearly 1.9 million retail salespersons, fewer than 40% were female, one of the lower proportions.

5. Top executives
> Women’s earnings as pct. of men’s: 70.0%
> Women median weekly earnings: $1,572
> Men median weekly earnings: $2,246
> Number of workers: 1,077,000

Top executives are responsible for strategies and policies that move an organization toward its goals by planning, directing, and coordinating the operations of their companies. They are usually a company’s highest earners. There were almost three times as many men as women in this occupation in 2014, the second highest ratio among the 10 jobs with the highest pay gaps. Men also earned nearly 43% more than women in the same position. Male CEOs had median weekly earnings of $2,246, the highest among men in all occupations reviewed. Earnings for all CEOs were also the highest compared to all occupations.

For the rest of the list, please go to 24/7WallStreet.com.

TIME Careers & Workplace

Here’s How Caffeine Can Silently Kill Your Success

Jorn Georg Tomter—Getty Images

Your daily cup of joe is hurting your performance far more than it's helping it

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This post is in partnership with Inc., which offers useful advice, resources and insights to entrepreneurs and business owners. The article below was originally published at Inc.com.

This week’s tip for improving your performance is the most simple and straightforward method I’ve provided thus far. For many people, this tip has the potential to have a bigger impact than any other single action. The catch? You have to cut down on caffeine, and as any caffeine drinker can attest, this is easier said than done.

For those who aren’t aware, the ability to manage your emotions and remain calm under pressure has a direct link to your performance. TalentSmart has conducted research with more than a million people, and we’ve found that 90 percent of top performers are high in emotional intelligence. These individuals are skilled at managing their emotions (even in times of high stress) in order to remain calm and in control.

The good: Isn’t really good.

Most people start drinking caffeine because it makes them feel more alert and improves their mood. Many studies suggest that caffeine actually improves cognitive task performance (memory, attention span, etc.) in the short-term. Unfortunately, these studies fail to consider the participants’ caffeine habits. New research from Johns Hopkins Medical School shows that performance increases due to caffeine intake are the result of caffeine drinkers experiencing a short-term reversal of caffeine withdrawal. By controlling for caffeine use in study participants, John Hopkins researchers found that caffeine-related performance improvement is nonexistent without caffeine withdrawal. In essence, coming off caffeine reduces your cognitive performance and has a negative impact on your mood. The only way to get back to normal is to drink caffeine, and when you do drink it, you feel like it’s taking you to new heights. In reality, the caffeine is just taking your performance back to normal for a short period.

The bad: Adrenaline.

Drinking caffeine triggers the release of adrenaline. Adrenaline is the source of the fight-or-flight response, a survival mechanism that forces you to stand up and fight or run for the hills when faced with a threat. The fight-or-flight mechanism sidesteps rational thinking in favor of a faster response. This is great when a bear is chasing you, but not so great when you’re responding to a curt email. When caffeine puts your brain and body into this hyper-aroused state, your emotions overrun your behavior.

Irritability and anxiety are the most commonly seen emotional effects of caffeine, but caffeine enables all of your emotions to take charge.

The negative effects of a caffeine-generated adrenaline surge are not just behavioral. Researchers at Carnegie Mellon University found that large doses of caffeine raise blood pressure, stimulate the heart, and produce rapid shallow breathing, which readers of Emotional Intelligence 2.0 know deprives the brain of the oxygen needed to keep your thinking calm and rational.

The ugly: Sleep.

When you sleep, your brain literally recharges, shuffling through the day’s memories and storing or discarding them (which causes dreams), so that you wake up alert and clear-headed. Your self-control, focus, memory, and information-processing speed are all reduced when you don’t get enough–or the right kind–of sleep. Your brain is very fickle when it comes to sleep. For you to wake up feeling rested, your brain needs to move through an elaborate series of cycles. You can help this process along and improve the quality of your sleep by reducing your caffeine intake.

Here’s why you’ll want to: caffeine has a six-hour half-life, which means it takes a full twenty-four hours to work its way out of your system. Have a cup of joe at 8 a.m., and you’ll still have 25 percent of the caffeine in your body at 8 p.m. Anything you drink after noon will still be at 50 percent strength at bedtime. Any caffeine in your bloodstream–with the negative effects increasing with the dose–makes it harder to fall asleep.

When you do finally fall asleep, the worst is yet to come. Caffeine disrupts the quality of your sleep by reducing rapid eye movement (REM) sleep, the deep sleep when your body recuperates and processes emotions. When caffeine disrupts your sleep, you wake up the next day with an emotional handicap. You’re naturally going to be inclined to grab a cup of coffee or an energy drink to try to make yourself feel better. The caffeine produces surges of adrenaline, which adds to your emotional handicap. Caffeine and lack of sleep leave you feeling tired in the afternoon, so you drink more caffeine, which leaves even more of it in your bloodstream at bedtime. Caffeine very quickly creates a vicious cycle.


Like any stimulant, caffeine is physiologically and psychologically addictive. If you do choose to lower your caffeine intake, you should do so slowly under the guidance of a qualified medical professional. The researchers at Johns Hopkins found that caffeine withdrawal causes headache, fatigue, sleepiness, and difficulty concentrating. Some people report feeling flulike symptoms, depression, and anxiety after reducing intake by as little as one cup a day. Slowly tapering your caffeine dosage each day can greatly reduce these withdrawal symptoms.

TIME Companies

This Is Microsoft’s New Plan to Invade Your Smartphone

Satya Nadella Delivers Opening Keynote At Microsoft Build Conference
Justin Sullivan—Getty Images Microsoft CEO Satya Nadella delivers a keynote address during the 2014 Microsoft Build developer conference on April 2, 2014 in San Francisco, California.

It's acquiring apps and quickly rebranding them as Microsoft products

Hardly a month passes these days where Microsoft hasn’t announced a new acquisition. In December it snapped up Acompli, a popular email app, for $200 million. Two weeks later it nabbed HockeyApp, a developer platform that shows how often a smartphone app crashes or bugs out. That was followed by the acquisition of Sunrise, a calendar app, for a rumored $100 million.

In total, Microsoft has gobbled up one to two young companies a month since November. It has all the appearances of a shopping spree.

In a way, this is just business as usual for the tech giant. Microsoft is an $86 billion-a-year enterprise. It doesn’t have to dig all that deep into its pockets to find a spare $100 million for an acquisition or two. Microsoft on average acquired 15 companies a year before 2009, according to data collected by market research firm CB Insights. That rate dropped to five a year around 2010 before picking up speed under CEO Satya Nadella, who took the reins in early 2014. If anything, Microsoft is just regaining its old appetite, which amounted to a whopping 149 acquisitions during Steve Ballmer’s 13-year tenure as the company’s previous CEO.

But what’s different about Microsoft’s latest acquisitions is the speed at which it’s turning them into new products for devices beyond those just running Microsoft’s Windows software. Microsoft has long struggled to make a dent in the mobile world, with more than nine out of 10 phones running either Android or Apple’s iOS. Nadella is now eager to make up for lost ground in mobile, and that’s meant a big change in Microsoft’s acquisition strategy.

“For a long time Microsoft’s strategy was embrace and expand, and everything was filtered through the lens of how this would advance Windows,” says Kevin Werbach, a legal studies and business ethics professor at University of Pennsylvania Wharton. But Nadella is more willing to make great apps regardless of which device is running them — he just wants Microsoft’s products in front of as many people as possible, and fast.

“Nadella is trying to reposition Microsoft into a faster moving and more nimble company,” says Werbach. “Showing that they can take an acquisition and turn it around quickly is indicative of that.”

Acompli is the best example of Microsoft’s new playbook: In a matter of weeks, Microsoft took Acompli’s popular email app and rebranded it as Outlook for iOS and Android, to rave reviews from the tech press. Before the Acompli move, Microsoft’s iOS and Android Outlook offering was nothing more than a clunky web portal disguised as an app. It’s a safe bet that Sunrise and similar acquisitions will reappear as Microsoft-branded offerings just as quickly.

Microsoft’s initial success with Outlook is a good omen for a company which many wrote off as having missed the boat on mobile. Its challenge moving forward will be ensuring that its apps are the absolute best offering for any particular task. Right now, Microsoft is benefitting from the app economy’s volatility: It’s easy for users to ditch one email app in favor of a new, better one. But that same characteristic could spell doom for Microsoft’s efforts down the road if the company gets too complacent — witness the unprecedented growth of Slack, a barely one-year-old office messaging app that hasn’t spent a cent on advertising, and yet has grown its user base 35% since the start of the year alone, much to the chagrin of its older rivals.

“A company like Slack, I don’t think anybody’s ever seen anything like this,” says Matthew Wong a research analyst at CB Insights. “The fact that companies especially in mobile can sort of achieve growth at the rate they are doing now is just too hard for companies like Microsoft to ignore.”

Microsoft will have to keep a vigilant watch over its apps. Its acquisition team will have to make quick and gutsy calls on which apps to bring in house, and which it can build better. The wrong call could also amplify criticism of its acquisition strategy — the company took a drubbing for its 2007 purchase of aQuantive, largely regarded as a $6.2 billion flop. A few killer apps that stay on top could help silence those critics once and for all.

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