Microsoft Corp. is betting a mix of old and young blood will revive the ageing technology pioneer, but new chief executive officer Satya Nadella may find it tough to push change with co-founder Bill Gates and former CEO Steve Ballmer breathing down his neck.
The 46-year-old India native and former enterprise business chief takes on the monumental task of exploring new directions – but with Gates as his consigliere, and on a strategy that Ballmer orchestrated with the board.
Is Satya really going to be allowed to make the transformative changes that Microsoft needs to make?
That uphill endeavour helped sour other candidates on the job, including proven change agent Alan Mulally at Ford Motor Co., sources have said.
Gates is giving up the board chairmanship to fellow director John Thompson. That, plus Nadella’s promotion, marks a changing of the guard at a 39-year-old company that fuelled the PC revolution, but is struggling with its longer-term identity after missing the boat on the mobile computing revolution.
“You’ve got a triumvirate running the company: Satya as the new CEO, Bill as the product adviser and John Thompson running the board. A lot depends on how the three of them get along,” said Bill George, Harvard Business School professor and former Medtronic Inc. CEO.
“The big question I have is, is Satya really going to be allowed to make the transformative changes that Microsoft needs to make, both at the product level and at the people level?”
The new Microsoft focuses on “devices and services” rather than licensing software, and seeks to emulate Apple’s success in marrying popular online services with attractive gadgets.
Set by the retiring Ballmer last year, that vision has proven unpopular with investors hoping either that Microsoft will stop ploughing billions into mobile devices – as it is doing with its Nokia acquisition – or come up with new products to take on mobile leaders Apple Inc. and Google Inc.
Nadella got a rich pay rise on his promotion, with a salary of $1.2 million, a maximum annual cash bonus of three times that and a stock award of $13.2 million for next fiscal year.
That is much more than the moderately paid Ballmer, who took home less than $1.3 million last year, chiefly because of his refusal to take stock awards, which he deemed unnecessary given his ownership of $12 billion worth of Microsoft shares.
Nadella’s pay is modest in comparison to tech superstar Marissa Mayer, who got a compensation package that could total more than $70 million when she took the helm at Yahoo Inc. two years ago.
The online element may play to the strengths of Nadella, who led the creation of Microsoft’s internet, or cloud, services.
Nadella has pushed the company in the direction of an internet-based future, using its network of vast data centres to host products such as Office 365, a subscription-based online version of its ubiquitous business software.
Nadella is only its third CEO in 39 years, taking over from Ballmer, who inherited the job from Gates in 2000. His appointment ends a five-month search process triggered by the August announcement of Ballmer’s decision to retire. That was longer than many investors had expected.