Watch the Throne

I didn’t write about the announcement of Steve Ballmer’s retirement from Microsoft or the changes that are and have taken place since the “One Microsoft” memo was released. So this is the start of a series of posts that will do just that.

And to begin I want to talk about two articles that talked about the search for a new CEO.

The first article by Reuters, dealt with detailing some of the final choices for CEO.  Among the potentials listed are Stephen Elop (CEO, Nokia) and Allen Mulally (Chairman and CEO, Ford) externally and internally Tony Bates (VP, Business Development and Evangelism) and Satya Nadella (VP, Cloud and Enterprise). The Reuters article also said the search committee had narrowed its list down to the four and one unnamed candidate to replace the embattled Ballmer.

Today, Bloomberg added more background to search by adding a third name, Microsoft’s Chief Operating Officer Kevin Turner, along with revealing a bit more other internal candidates. The Bloomberg article is also of note because of the names said to have been approached. The names include former Microsoft executive Paul Maritz, Oracle VP and former head of Hewlett-Packard Mark Hurd, and EBay head John Donahoe.

Right now we know only that there is an independent search committee being headed by Microsoft board member John Thompson. We also know that the plan is to have someone in the CEO chair by end of the year.

So how do we assess the candidates themselves?

There are at least two factors I think that will go into how the next CEO is chosen; one is how they view the direction of the company and two is how they will look to Wall St. The new CEO will get a grace period but the name chosen will have to leave a good impression. 

Another factor to consider in determining how well the next company head will be received is in how he meets analyst expectations. Right now if you take Normura Securities analyst Rick Sherlund as a measure, the next CEO needs to reassert Microsoft as a enterprise software company with services like Azure and Office. Right now I see the Street view as dump Bing and online services and spinoff the Xbox side of the house. In their view Microsoft should appeal to its strength in enterprise and only should go as far as providing apps for iOS and Android in the consumer space.

Now internally what I think the search committee is trying to do is find the right person for the next decade and one that agrees with the idea of One Microsoft and the move toward Devices and Services. The last moves of Steve Ballmer, to move the Software giant into hardware and software services, has been controversial. Microsoft has made its money by leveraging the partner model. Additionally hardware has much lower margins than software.

However I think Microsoft and its Board don’t see how staying out of the consumer space and focusing on enterprise is a valid option. I think for many inside the company they see future growth in sales coming more from the consumer side of computing than business. Businesses will hold onto older copies of Windows and Office  as well as old devices. I also think they see a focus on enterprise only and merely being a provider is good only in the short term.

Getting out of the consumer business and going back to being a simple platform agnostic software maker would absolutely work. It also wouldn’t last long. The combination of Bring Your Own Device (BYOD) and the general encroachment of consumer based products like iPads and Android needs addressing beyond simply delivering tablet apps and calling it a day.

At the end of the day I think the Board believes in the services and devices course but want someone to take it to its logical conclusion.

Since I made this long, the next post will talk about the potential candidates. 


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: