Microsoft: CEO Nadella still has his work cut out

Satya Nadella’s first year as CEO of Microsoft is nearing its end. How did he do?

Satya Nadella's first year as CEO of Microsoft is nearly over and what a year it’s been. Unfortunately for Nadella, the timing could not be worse as Microsoft's stock is down by about 9% and Windows revenue from PC manufacturers is down 13%. To be fair to Nadella, this is partly down to the rise in strength of the US dollar which has hurt many US companies, including Apple. Still, you’ve got to feel a bit sorry for the guy after all the hype and excitement surrounding Microsoft’s virtual reality headset HoloLens (what was Google Glass again?) and the announcement of Windows 10.

Despite the recent turn of events, how did Nadella fare in his first year? Nadella set a decisive tone in his first email to his employees when he came in, and decisive he had to be. Prior to Nadella's appointment, Microsoft was in a truly dire state and needed saving - fast. The once mighty tech giant had pretty much lost out on all of the major innovations of the last decade as Apple gleefully sped ahead. There was a time when Microsoft set the standard and everyone followed. Then it all went horribly wrong.

So how on earth was Nadella going to turn things around?

Nadella may have his critics but since he has come in he has made some positive moves. His backing of search engine Bing is proving to be good as it now drives Microsoft's ads having increased its share of the US search advertising market to 10.5% in 2014, up from 9.2% in 2013. Plus, Microsoft's cloud computing business (Azure, Office 365 and Dynamics CRM online) is on track to generate $4.4 billion in revenue this fiscal year.

Of course it has not all been plain sailing. His comments about how women should trust “karma” instead of asking for pay raises were taken none too kindly at the Hopper conference in Arizona. The media had a field day with that, but Nadella later apologised for his gaffe. Nadella’s decision to cut thousands of jobs in the biggest layoff in the company’s history was also met with controversy. Nadella talked about having a “leaner” organisation and the layoffs were a huge part of reshaping Microsoft.

Nadella taking over the reins was never going to be easy and I believe he should be given some credit for some of the changes he has made. But Microsoft still faces stiff competition from companies like Amazon and Apple. Apple has just announced its highest ever earnings thanks mainly to its iPhone sales while Microsoft’s influence in the smartphone market is nowhere to be found. Amazon is also continuing to be troublesome for Microsoft as it continues to lead in the cloud. But Microsoft's Azure is promising and could eventually prove to be an interesting alternative – if it gets there.

After suffering through years of missed opportunities it was always going to be a long and hard battle for Microsoft and Nadella has a lot to prove. As his first year ends and the hard graft begins, like any leader, Nadella’s leadership and vision will continue to be questioned and tested but is he the man for job? I believe he is. 


Ayesha Salim is Staff Writer at IDG Connect