It’s not even nine months into the Satya Nadella era of Microsoft and the new CEO is making his mark. Notably, his Microsoft is smaller after completing this week most of the 18,000 job cuts he announced in July. Whether Nadella’s plans for Microsoft succeed, it’s clear the company is dramatically different from the Microsoft that ruled the technology industry in the 80s and 90s. The Microsoft that Nadella leads has strayed so far from its original incarnation that it seems in some ways to have become nearly its opposite. Here are seven examples of how today’s Microsoft is different from the juggernaut Bill Gates built.
1. Microsoft has a kinder, gentler CEO. Bill Gates frequently hurled verbal abuse at employees and was coldblooded about deploying predatory practices against competitors. Steve Ballmer had a reputation for hurling chairs and inspiring the rank and file in manic, sweat-soaked diatribes. Both heightened Microsoft’s image as a hard-charging software giant.
Nadella is cut from a different cloth entirely. Yes, his mansplaining about salaries revealed an ability to insert his foot in his mouth, but most accounts of his temperament describe a low-key and humble personality at odds with those of his predecessors. He communicates not in fist-pumping speeches but lengthy memos on strategy.
2. The tables have turned in the Microsoft-Apple rivalry. For decades, Apple had but a sliver of the market share for personal computers. In 2014, Apple is not onlyshipping more personal computers – counting the ones that fit in our pockets – it’s making much more money from them. Apple made $156 billion in revenue from iPhones, iPads and Macs in the last year. And Microsoft? Between Windows and Office software, Nokia phones and Surface tablets, it saw about $23 billion in revenue.
3. Microsoft isn’t a monopoly, but it competes with some. Gates never got the stranglehold he wanted on the Web, thanks to antitrust lawsuits and the Internet’s decentralized structure. And today, Microsoft is just one more company fighting for turf in a variety of markets: enterprise software, game consoles, search and, yes, personal computers.
And anyway, monopolies in the Internet era aren’t quite what they used to be. Yes, Amazon is bullying publishers but it’s pushing prices down, not up. Yes, Google dominates in search but it costs consumers nothing to find a perfectly good alternative like Bing. Neither of those companies is exactly stifling innovation but rather investing heavily in new technologies.
4. Microsoft isn’t really a Windows-driven company. And not just because PC sales have been declining for years. It’s more because Microsoft under Ballmer expanded into gaming and enterprise software markets. Under Nadella, these are becoming an even bigger part of the business. Enterprise offerings like server and storage software, cloud computing and consulting services made up 53% of revenue last quarter. Xbox made up 7%. Windows and Office were only 18%.
5. Microsoft has stopped worrying and learned to love open. Or at least it’s trying. Where Ballmer called the Linux open-source operating system a “malignant cancer,” Nadella proclaims, “Microsoft loves Linux.” All along, Nadella has said Microsoft needs to develop its own platform while playing well with others. Thefitness tracker Microsoft announced Thursday works with Windows as well as Android and iOS phones. Its Office programs work on those platforms too, even though that approach is leaving Microsoft vulnerable to upstarts.
6. It’s not exactly a growth company anymore. In the mid-90s, Microsoft’s revenue was growing by nearly 40% a year. It’s risen an average of 8.5% a year over the past two years, although that pace could increase this year under Nadella. Wall Street demands from Microsoft the kinds of hefty payouts older, slow-growth companies offer: Last year, Microsoft spent $4.9 billion on buybacks and $9.3 billion on dividends. Taken together, that’s more than Microsoft spend on R&D.
7. But it’s slowly gaining cachet among young geeks. A generation of software engineers grew up in the 80s and 90s loathing Microsoft – calling it evil, the Borg, or worse. But for those who came to know Microsoft not through Windows but the Xbox console and Halo franchise, the feelings range from indifferent to positive.
The $2.5 billion purchase of Mojang may or may not make Microsoft a cool brand. But it will wash away the hostility that the Microsoft brand inspired only a dozen years ago. Most kids who love Minecraft seem to think of Microsoft as a big corporation that won’t hurt and might even help Minecraft develop. That generational shift in sentiment may be the most dramatic evidence of how Microsoft has changed.
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