It is easy to be impressed by what Mr Nadella has achieved in only three years. But it is far from certain that his technology bets will play out as planned. To run a computing cloud profitably you need hyper-efficient operations; something that Amazon, in contrast to Microsoft, has grown up with. Although Microsoft has expertise in AI, others, such as Google and IBM, got a far earlier start. Nor is designing integrated devices part of Microsoft’s DNA in the way it is for Apple. Augmented reality is an extremely promising field but HoloLens may turn out to be no more than an expensive toy for developers.
The narrative has been that Nadella has turned the ship around from the whirlpool Steve Ballmer was leading it into. But, as The Economist
notes, the jury is still very much out as to just how “turned around” Microsoft really is now. Yes, it’s a decidedly more friendly and seemingly more innovative
company once again, but that comes at the expense of the cash cows Ballmer milked to great effect for so long.
The end result may be a decidedly smaller Microsoft (in terms of both revenues/profits and presumably, headcount) as they move from one of the world’s most lucrative businesses, packaged software, to far more competitive, expensive, and unproven ones.
That’s not a bad thing necessarily. It’s just a very different company, and one that will have to have different metrics for success. Because apples-to-apples (pun sort of intended) comparisons to the legacy businesses of Microsoft probably won’t look too great, I imagine…