{"id":68066,"date":"2018-12-10T14:51:06","date_gmt":"2018-12-10T14:51:06","guid":{"rendered":"https:\/\/news.microsoft.com\/?p=428949"},"modified":"2018-12-10T14:51:06","modified_gmt":"2018-12-10T14:51:06","slug":"forbes-exclusive-interview-satya-nadella-reveals-how-microsoft-got-its-groove-back","status":"publish","type":"post","link":"https:\/\/sickgaming.net\/blog\/2018\/12\/10\/forbes-exclusive-interview-satya-nadella-reveals-how-microsoft-got-its-groove-back\/","title":{"rendered":"Forbes exclusive interview: Satya Nadella reveals how Microsoft got its groove back"},"content":{"rendered":"

I<\/sup><\/p>\n

n early 2016, two years into running Microsoft<\/a>, CEO Satya Nadella needed advice from one of his newest employees, the cofounder of an app-tool maker Microsoft had just bought. Nadella was close to pulling off his blockbuster $27 billion acquisition of LinkedIn, but he wanted to talk about another company he coveted: GitHub. \u201cCan we do it?\u201d Nadella asked the executive. \u201cHave we earned the trust?\u201d<\/p>\n

Back then, the answer was no. GitHub is the virtual watercooler of software development, a site where millions of programmers talk shop and share code across company boundaries. Microsoft had earned a reputation during its 1990s heyday as its polar opposite, an insular software belligerent, and GitHub was seen as wanting nothing to do with it. But after watching Nadella lead the Redmond, Washington-based giant for two years, GitHub<\/a> made a surprise move, choosing Microsoft over Google as its acquirer this past June.\u00a0<\/p>\n

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The December 31, 2018 issue of Forbes featuring Satya Nadella. <\/p>\n<\/figcaption><\/figure>\n

It was the latest coup for Nadella, 51, who\u2019s breaking free of Microsoft\u2019s recent past by returning it to its roots under cofounder Bill Gates.<\/p>\n

\u201cBill used to teach me, \u2018Every dollar we make, there\u2019s got to be five dollars, ten dollars on the outside,\u2019\u2009\u201d Nadella tells Forbes,<\/em> in his first sit-down interview since the $7.5 billion deal closed.\u00a0<\/p>\n

Great companies were once built on Microsoft\u2019s code, Nadella says he was reminded by Gates. Nadella\u2019s mission: Rebuild Microsoft brick by brick until it can happen again. \u201cThat\u2019s what I want us to rediscover,\u201d he says.<\/p>\n

Signs of Nadella\u2019s progress<\/a> are found everywhere. From a Microsoft voice assistant that integrates with Amazon\u2019s Alexa to a deepening alliance with Samsung and, most crucially, in its financial statements. Revenue, at $110 billion, is growing at a double-digit percentage after slumping for most of the past decade, in large part because of the hard-charging\u2014and high-margin\u2014cloud suite the company has built around Office and Azure, Microsoft\u2019s challenger to Amazon\u2019s cloud juggernaut. Net profits are at $16.6 billion, an increasing share of which is attributable to Azure, which is growing at 91% annually with multiyear contracts only just starting to boost the bottom line. Microsoft ended November as the most valuable company in the world, eclipsing Apple and Amazon. The consensus among analysts is that it will hit $1 trillion in market cap sometime next year.<\/p>\n

Read the complete <\/em><\/strong>Just 100 2019<\/em><\/strong><\/a>: America’s Best Corporate Citizens<\/em><\/strong><\/p>\n

Much of the credit belongs to Nadella, a Microsoft near-lifer who took the reins from Steve Ballmer in 2014 and immediately started knocking down walls. The former engineer says he has focused the company around a simple concept: \u201cequitable growth.\u201d<\/p>\n

\u201cPeople are finally coming around to saying, \u2018It\u2019s not just the surplus you\u2019ve created for yourself. What\u2019s the state of the world around you?,\u2019\u2009\u201d Nadella says. \u201cThat\u2019s where I feel like we\u2019re at our best.\u201d<\/p>\n

Nadella signaled his intentions with the help of an iPhone. Weeks after his start as CEO, Microsoft opened up its Azure cloud service to make it easier for developers to create iOS apps. The following year, Nadella used an iPhone onstage at an event\u2014unthinkable for a company that had brewed up the market-lagging Windows phone in 2010 and then blew more than $7 billion in 2014 buying Nokia\u2019s mobile division to support it. When Nadella took over, he wrote off the whole deal as a loss.\u00a0<\/p>\n

Behind the scenes, Nadella got to work on Microsoft\u2019s culture of infighting and of treating competitors as if it were \u201cstraight-up war,\u201d as a former Oracle exec puts it. With its rearward-facing obsession with Windows, the cash-cow operating system, Microsoft was caught unawares by the cloud boom (exemplified by Amazon Web Services) and by subscription software businesses like Salesforce.\u00a0<\/p>\n

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CEO Nadella is returning to a core Bill Gates lesson: “Every dollar we make, there’s got to be five dollars, ten dollars on the outside.”<\/p>\n<\/blockquote>\n

Nadella, who immigrated to America from India in 1988, was an insider who led the company\u2019s nascent cloud business before taking the top job. He quickly installed new leaders and smashed the barriers between Microsoft and open-source rival Linux, which had been famously called a \u201ccancer\u201d by his pugnacious predecessor Steve Ballmer. Nadella and Scott Guthrie, the new cloud boss, welcomed Linux onto Azure\u2019s IT framework, where it\u2019s now used by half of all computer systems operating on Microsoft\u2019s cloud. \u201cWhen we achieved our success, with that success came out the classic hubris that I describe as being the know-it-alls,\u201d Nadella says. \u201cI said, \u2018Let\u2019s shed that.\u2019\u2009\u201d<\/p>\n

To chip away at Amazon\u2019s massive head start in cloud (Amazon Web Services is on track to make $27 billion in revenue a year, compared with an estimated pace of $10 billion for Microsoft\u2019s Azure and $3 billion for Google), Microsoft turned to its partners. Sales reps are now compensated when a deal with a key ally of Microsoft leads to more activity on Microsoft\u2019s cloud. And companies working with Azure find themselves brought into million-dollar deals at the one-yard line. \u201cAll of us have been stunned they are doing it,\u201d says Bob Muglia, CEO of San Mateo-based data-warehouse software maker Snowflake and a 23-year Microsoft veteran, who left in the Ballmer years. \u201cSatya\u2019s recognized this is a service-oriented world.\u201d<\/p>\n

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Starbucks, which uses Microsoft to help power its ordering app, sent a dozen engineers to the world\u2019s largest invite-only hackathon, hosted by Microsoft\u2014another Nadella-era idea. \u201cIt\u2019s a different approach from a traditional software company,\u201d says Gerri Martin-Flickinger, Starbucks\u2019 CTO.<\/p>\n

But there are asterisks attached to this new exuberance. Much of Microsoft\u2019s success has come from moving existing customers onto its cloud services and its revamped Office 365 work software suite, raising concerns that the company is simply harvesting low-hanging fruit, says Dan Ives, an analyst at the Los Angeles investment firm Wedbush. And while the breadth of Microsoft\u2019s portfolio, which also includes gaming, search and devices like Surface tablets, is a great strength, it could still get tripped up again by success. \u201cThe risk is they go back to the old days,\u201d says Raimo Lenschow, an analyst at Barclays. (Both are bullish on the stock.)\u00a0<\/p>\n

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“People are finally coming around to saying, ‘It’s not just the surplus you’ve created for yourself. What’s the state of the world around you?’ That’s where I feel like we’re at our best.” <\/p>\n<\/blockquote>\n

Now with GitHub in the fold\u2014following acquisitions of the maker of Minecraft<\/em> ($2.5 billion, 2014), app-building-tool provider Xamarin (reported as $400 million, 2016) and LinkedIn\u2014Nadella\u2019s team needs to avoid falling into bad habits such as restrictive long-term contracts. How the company integrates all these purchases\u2014and history suggests it will be difficult\u2014will also test Nadella. To navigate these challenges, Nadella relies on his broader vision that happier employees, customer and partners\u2014even prickly coders\u2014have to do well for Microsoft\u2019s business to flourish. \u201cA successful product is one that fosters more success around it,\u201d Nadella says.\u00a0<\/p>\n

To pull it off, Nadella will lean on new leaders like Nat Friedman, the Xamarin cofounder whom Nadella asked about GitHub in 2016 and then tapped to run the business for Microsoft once the deal closed. As Friedman, whose new job entails evangelizing that message to GitHub\u2019s 31 million developers, puts it: \u201cPeople are giving Microsoft the benefit of the doubt.\u201d<\/p>\n

Reach Alex Konrad at akonrad@forbes.com. Cover image by Jamel Toppin for <\/em>Forbes. <\/p>\n

This story appears in the December 31, 2018 issue of Forbes. <\/em>Subscribe<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

I n early 2016, two years into running Microsoft, CEO Satya Nadella needed advice from one of his newest employees, the cofounder of an app-tool maker Microsoft had just bought. Nadella was close to pulling off his blockbuster $27 billion acquisition of LinkedIn, but he wanted to talk about another company he coveted: GitHub. \u201cCan […]<\/p>\n","protected":false},"author":2,"featured_media":68067,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[50,428],"class_list":["post-68066","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-microsoft-news","tag-recent-news","tag-satya-nadella"],"_links":{"self":[{"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/posts\/68066","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/comments?post=68066"}],"version-history":[{"count":0,"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/posts\/68066\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/media\/68067"}],"wp:attachment":[{"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/media?parent=68066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/categories?post=68066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sickgaming.net\/blog\/wp-json\/wp\/v2\/tags?post=68066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}