On Monday, Sept. 26, Yahoo Finance will live stream Microsoft CEO Satya Nadella’s keynote at the Microsoft Ignite Conference, at 4 p.m. EST.
Microsoft’s Satya Nadella has been the CEO of Microsoft for a little more than two years, having taken over for former CEO Steve Ballmer in February 2014. In that time, the company, which was quickly sliding into irrelevancy with consumers, seems to have completely reinvented its image.
What was once a colossus teetering on the brink is now, incredibly, the cool kid in town. A lot of that change has to do with Nadella taking the helm, sure. But much of it comes from the products Microsoft now offers.
A new rallying cry: “Mobile first, Cloud first!”
Since he took over, Nadella, who has been with Microsoft since 1992 and most recently headed up its cloud division, has repeatedly said Microsoft needs to be a “mobile-first, cloud-first,” company. That sounds rather odd for a tech giant that built its empire on sales of its Windows operating system and Office productivity software. But that’s where Nadella believes the company needs to go to survive.
It’s even more odd for a tech company that has failed so spectacularly when it comes to its Windows smartphones. The company’s handset division saw a massive restructuring and laid off thousands of employees following its acquisition of smartphone maker Nokia’s phone business for $7.2 billion in 2014.
But when Nadella speaks of mobile first, he isn’t talking about a second coming of Windows Phone. Instead, he means he wants the company’s software to work across mobile platforms and devices. That, naturally, leads to the second half of Nadella’s rallying cry: making the company cloud first. The cloud, in its broadest sense, is a series of computers attached to each other that allow you to run high-end software and store your files online.
As analyst Al Gillen, group vice president of IDC’s software development and open source group, explains, one of the most important steps Nadella took after becoming CEO was to drag Microsoft into the age of open source.
“Microsoft has gotten in sync with where the industry is going,” Gillen said. “Satya immediately made clear that the old norms weren’t going to work any more. They needed to embrace technologies that the rest of the world saw as important.”
That included working with the popular open-source Linux operating system, which many companies have used to build their web servers. Microsoft’s former CEO Steve Ballmer famously referred to Linux as a cancer.
“There are people inside Microsoft that probably saw it as a hard transition to make,” Gillen explained. “There were people there that spent most of their lives fighting against Linux and Apple. And the idea of taking their products and having to work with those companies was essentially unheard of up until Satya Nadella took over the role.”
Microsoft has even put its cash cow Office on iOS and Android devices and developed new apps for Apple’s iPhone.
But working with other companies and types of software isn’t just a way to make Microsoft seem cool and interesting. It’s an important way to bring in younger developers who may only have experience working with Linux, as well as ensuring that its products will work on the highest possible number of systems.
More importantly, however, is that Microsoft understands that if it is to survive the next big technological shift, it has to move to the cloud. As it stands now, the future of tech is pointed toward cloud computing. That’s because, in its ubiquitousness, the cloud provides a means for consumers and companies to access their data at any time on any device. You need look no further than the success of Amazon’s popular Amazon Web Services (AWS), which has helped push the company’s stock price to all time highs in recent days.
Microsoft, though, is putting up quite a fight with its Azure cloud computing services. According to Microsoft’s own numbers, 85% of Fortune 500 companies use Microsoft’s cloud services and it adds 120,000 new Azure subscriptions per month.
Growing beyond just the cloud: Windows, Office, and 2 big acquisitions
Outside of the cloud, Microsoft has helped to rehabilitate its image among consumers with the release of its new Windows 10 operating system. The follow-up to the widely disliked Windows 8, Windows 10 was offered as a free upgrade to Windows 7 and Windows 8 users for the first year of its availability.
The company also now offers its Office software with a yearly subscription in addition to the standard one-time purchase price. The benefit to consumers in buying the subscription version of Office is that their version of the software is never outdated. The benefit to Microsoft: a continuous revenue stream.
Then there are the two enormous acquisitions Microsoft has made under Nadella’s guidance: LinkedIn and Mojang, maker of “Minecraft.”
Microsoft announced its intent to acquire LinkedIn in June at a staggering price of $26.2 billion. The idea behind the purchase was to marry the “world’s leading professional cloud” with the “world’s leading professional network.”
The purchase of Mojang for $2.5 billion, meanwhile, gave Microsoft the ability to get its name into the heads of children who may have only played games on their parents’ iPads or iPhones.
Of course, any mention of Microsoft’s renewed status is incomplete without discussing the company’s hardware offerings: the Surface Pro 4 and Surface Book. Both devices offer sleek, industrial designs (similar to Apple’s trademark styling) and exceptional performance.
And then there is HoloLens. The virtual-reality headset allows users to interact with digital elements ranging from standard windowed apps like Microsoft’s Edge browser all the way up to digital medical school cadavers projected into the real world. HoloLens is the kind of big idea that can genuinely excite not just a company’s existing fan base, but consumers as a whole.
Microsoft doesn’t just see HoloLens as some kind of backroom pet project that never sees the light of day, either. The company is actively pitching the product as the future of personal computing, the next step in the evolving consumer technology revolution that has run from graphical user interfaces through the internet age and to the current mobile world.
Microsoft still has stiff competition in the tech world
But Microsoft doesn’t exist in a vacuum. The tech industry is in a constant state of flux and while the company’s fortunes appear to be on the upswing in terms of public perception and the cloud, a single misstep could reverse all of the goodwill the 41-year-old company has garnered in the past few years.
Microsoft also still has to contend with the fact that its presence in the mobile space is virtually nonexistent next to the likes of Apple and Google. And while HoloLens is an ambitious idea, both Apple and Google are most assuredly working on equally intriguing projects of their own. There’s also the fact that Microsoft is still without a significant contribution to the growing smart home industry.
For now, though, Microsoft is the cool kid again, now it’s going to have to work to keep it that way.
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Email Daniel at dhowley@yahoo-inc.com; follow him on Twitter at @DanielHowley.
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