Microsoft CEO Satya Nadella is on a mission to "re-invent productivity." But can the tech giant win the future when it's not the influencer it once was?
Ask the average person what they love the most about the technology they own, and there's a good chance they'll mention a beautiful Apple gadget, a seamless software experience designed by Google, a flashy device from Samsung or any number of fun and cool apps.
Microsoft, while certainly not absent from the mix, is a few levels down. The company is still very successful, and Windows is still everywhere (the OS runs on 91.5% of the world's desktop PCs), but Microsoft products — both hardware and software — simply aren't thought of in the same way.
A Windows PC was, for many, their first taste of real computers. Today it's usually the machine they use somewhat reluctantly — either a work machine or something purchased because of value. It gets the job done, but it may not be the first choice.
Back in the 1990s, Microsoft was the only name in tech that really mattered. In the 2000s, however, it failed to adapt to the changing tech landscape as people spent more and more time — both personally and at their company — on mobile and on the web.
Former CEO Steve Ballmer, who succeeded Bill Gates in 2000, famously regretted not betting on mobile and search — and by proxy, web services — earlier. (He also said he feels worse about the mobile fumble than about lagging in search).
In recent years, Microsoft has tried to correct the course that led it to dwindling mindshare. It finally launched a mobile experience comparable to the iPhone in 2010, and a tablet experience came two years later with Windows 8.
Neither has been much of a success. Despite signs of life, Windows Phone limps behind iOS and Android, and a critical mass of marketshare is seemingly forever out of reach. Windows 8 (and later 8.1) have been widely perceived as an unqualified disaster. Even Microsoft had to acquiesce to criticisms by rethinking and de-emphasizing many of its features and design elements in later releases — the most telling example being its reversal on the Start menu, which will return when Windows 10 launches next year.
Such high-profile stumbles have led Microsoft to step back and rethink its entire approach. The man doing much of that thinking: Satya Nadella, who has been the company's CEO since February.
Microsoft's board settled on (some might say settled for) Nadella, a 22-year company veteran who had been running cloud services, after a lengthy, semi-public search for candidates that at one point included Ford CEO Alan Mulally.
A couple of months after succeeding Ballmer, Nadella wrote a long treatise on his vision for Microsoft, which centers around re-inventing "productivity." At first glance, this appeared to signify that Microsoft is retreating from its consumer ambitions to what it does best: making business software.
In a recent meeting with reporters, however, Nadella explained that his vision of productivity encompasses far more than that. He also expanded on the company's new strategy, and how Microsoft can help define technology in the next decade — and may even get some people to love its products in the process.
"To me, [productivity] is not a single software category, but it is the software category," he says. "We think of it as the core driver of use of technology — to create fulfillment in individual lives and drive economic gain for entire organizations and economies. That's the scope in which we go at it.
"A lot what we want to achieve with Windows will be measured more as the cross-device experience that we orchestrate because of Windows. It's not about one size fits all … trying to put one experience on every device form factor, but it's about being able to have consistency."
For a concrete example of the kind of software experience that Microsoft can bring to the table, Nadella cites OneNote. He explains that he can open an app on his phone, move to a PC with a mouse and keyboard, and even interact with the app on one of Microsoft's big Perceptive Pixel displays — large, TV-size touchscreens — that the company has scattered across its campus.
The point: because of the way the software works, both he and his colleagues can collaborate on a project in a way that makes sense, across devices, either at the same time or at different times.
Anyone who has needed to teleconference with multiple people with minimal IT support is familiar with the opposite situation, where the software experience is fragmented and broken. A conference room is typically loaded with technology — everyone has a phone, tablet or PC (sometimes all three), and the room has equipment, too. Yet there's no way to reliably get all of those devices to work together to produce a good experience.
"The reality today is people don't just sit in their office and sit by themselves on a particular task," says Kirk Koenigsbauer, corporate vice president of Microsoft Office 365 Client Applications. "Work is so collaborative now. We talk about 'together productivity' a lot, and we think it's so fundamental."
The Microsoft factor
It's those kinds of problems that Microsoft is determined to solve in the coming years. More to the point, it's the kind of problem Microsoft is particularly suited to solve.
Building collaborative software, Nadella says, is something Microsoft is extremely focused on, as it goes hand-in-hand with his "cloud-first, mobile-first" strategy.
On this point Nadella has some indirect criticism for one of Microsoft's perennial rivals, Apple, turning CEO Tim Cook's own words against him.
"To me, Apple is very clear," he says. "I think Tim Cook did a great job of describing it very recently when he said they sell 'devices.' In our case, our identity is really about empowering others to build products. It's not really about us and our products."
Nadella certainly gives praise where it is due: Apple builds beautifully designed devices that people love to use. But in doing so it has offered what Nadella sees as a limited vision of mobile: a highly individualized experience with oodles of apps perfectly optimized for phones and tablets — but few that go beyond that.
A good example of the limitations of Apple's mobile experience is how the iPad handles multiple profiles. Which is to say, it doesn't. The iPad offers an exquisite experience for a single user, but there's little attention paid to collaboration, sharing and leveraging the tremendous amount of personal data we store in the cloud.
Nadella thinks Microsoft can do better, and soon. During the same years Microsoft was taking its first shaky steps with Windows Phone and Windows 8, it was also strengthening its cloud services and data-driven products. Azure is now a full-fledged cloud back-end service, going toe-to-toe with Amazon Web Services and augmenting existing enterprise Windows servers.
OneDrive is such a robust cloud storage service that Windows 8.1 PCs confidently make it the default place to save documents. And Windows Phone's Cortana is a more realized vision of a digital voice assistant than her competitors (although how she responds to specific queries is still a mixed bag).
"We don't draw distinctions between work and life," Nadella says. "We started off with life, and then we became successful at work. We clearly are very committed to not having those seams show up in the everyday usage of our tools. Skype and Lync, OneDrive and OneDrive for Business, Outlook and Exchange — all of these things come together as one experience."
With Cortana in particular, Nadella sees a big opportunity. Putting the voice interaction and personality aside, the idea of context-based assistant that has access to all of our data in the cloud is a powerful one, and it could be applied to corporations as well as individuals.
"Just knowing what is in your email, like 'how long will it take for me to read this email?'" Julie Larson-Green, Microsoft's Chief Experience Office, suggests. "We can do a pretty good job of that. Suggesting to you: You have 10 free minutes and 19 emails; you can read them all in seven minutes — do you want to do that?
"You have to be careful, though — not everybody likes coaching."
Nadella believes Microsoft's access to corporate data gives it a huge asset in this department. Although the data itself will always be owned by the corporation or individual, Nadella says, Microsoft can design software platforms that take advantage of it. Presumably, businesses already running Windows (read: pretty much all of them) will be well-positioned to integrate such technology.
"Cortana reasons about all of your information, has the ability to respond to your queries, but more important can proactively prioritize and get stuff done," Nadella explains. "This notion of having context reasoned about and used to get more done. It's not just about the question and answer but it's really the proactive canvas of Cortana which I think is going to be very rich."
With regard to data-driven cloud services, Microsoft has a clear, and bitter, rival: Google.
Nadella has some carefully chosen words for its cloud competitor, too, saying that Google's entire business model is centered around an ad network, which makes its money by capturing and leveraging data to serve people ads in a "tasteful way."
"Google is about data, it's about advertising," Nadella says. "And they've done a great job with that business."
To be fair, while Google makes the bulk of its money selling ads, many of its products don't even touch its ad network, and, generally, the data it captures is either anonymized or opt-in.
Moreover, many of its software products are trying to solve the same problems as Microsoft's. Google Docs and QuickOffice are cheaper, if less full-featured corollaries to Office 365. Google Drive is similarly positioned against OneDrive. And Google Hangouts offered free multiple-person video chat long before Skype.
Google has also been playing the cloud game in a meaningful way longer than Microsoft, and people everywhere use its products — thanks in part to a certain mobile jet fuel called Android.
Compared to Microsoft, Google is a relatively new company. It's certainly a large corporation, but it makes efforts to keep some startup sensibilities. For example, founders CEO Larry Page and Sergey Brin still take the time to host town hall meetings every Thursday.
By contrast, Microsoft has been criticized for cutthroat management practices that have at times stymied communication (the tragic saga of the Courier tablet is a good example) and discouraged teamwork. Ballmer kicked off a company-wide reorganization in 2013 in part to change the company culture, and Nadella's memo to employees after a this spring's huge round of layoffs implied he was streamlining things further by removing some bureaucracy.
The changing culture has begun manifesting in some ways. Microsoft Garage, the company's in-house incubator that launched in 2011, opened up its doors to the public in October. Even the way Microsoft is rolling out Windows 10, with constant collaboration from customers, particularly enterprise ones, is an impressively open-minded approach.
To get an edge in the cloud war, however, Microsoft will need more than just spark; it needs to execute. And that's exactly what Nadella is trying to accelerate by refocusing the company around productivity.
The word — which Nadella admits the company struggled with — doesn't exactly capture everything Microsoft is trying to do, but it does feel right somehow.
Broadly, productivity means getting things done, and there's no question that Microsoft has been making software for that purpose for decades. That legacy is its strongest asset. Windows and Office 365 are so entrenched in business at this point that despite the availability of a host of free alternatives, including apps from Apple and Google, they're still the go-to software for many companies, and that "default" carries over to individuals.
Nadella believes Microsoft can leverage that asset even while others are stronger in devices and cloud services. As he sees it, it's fine to offer cool devices and so-called "free" software, but to truly be productive, the software needs to bring developers and IT managers into the conversation. And no one is better suited to do that than Microsoft.
"The computing power that's all around you is ubiquitous, and it's far more than anything we envisioned when we first built some of our tools for productivity," Nadella says. "Then you add to it this limitless could capability, which not only adds more computing power, it helps you orchestrate your experiences across all of these devices and all of these sensors.
"So it's a really rich canvas. That's why I think it's time to re-invent productivity."
A new tech world to be won
It'll be years before it's clear whether Nadella's approach is the correct one, since much of his vision appears tied to Windows 10, due to launch in late 2015. But there's a sense his leadership has reinvigorated the company with a higher purpose, despite his presiding over a year filled with layoffs and inheriting the dog that is Windows 8/8.1.
Nadella may have been a relative unknown before taking over as CEO, but Microsoft's own identity is stronger than it's been in years. Under Ballmer, Microsoft was exemplified by the original Surface tablet — a confused device that wanted to be your work computer and your sexy-and-fun iPad replacement.
On the other side, Nadella's Microsoft is more like the Surface Pro 3, a device that doesn't apologize for being a productivity-focused workhorse PC, complete with desktop, command line and .exe files. Sure, you can do iPad stuff on it, but that's not why you buy it.
Under Nadella, Microsoft aims to be the company we turn to when we need to get stuff done — for both businesses and individuals. If that vision is realized, though, it won't be because of the company's legacy, money or even its footprint in the enterprise. It'll be because of the insights the company has about collaboration, context and how those things manifest on various devices are better than anyone else's.
Nadella's up for the challenge, his vision is insightful and Microsoft appears completely behind him.
Now comes the hard part.
Tags: 10, Microsoft, OFFICE 365, SATYA NADELLA, WINDOWS