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Microsoft CEO appointment indicates cloud focus

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One of the most significant and high-profile jobs in any sector, not merely the technology strata, has just been filled after a long period of apparent cogitation. The appointment of the new CEO of Microsoft has proven to be one of the most laborious processes within recent memory, but the decision has finally been taken to appoint the Indian Satya Nadella to this critical position within the software giant. Evidently, with Microsoft at a crossroads in their existence there was a lot of care taken to select the right person for the job, and when looking and Nadella’s history and previous position it immediately becomes evident why he was chosen.

Nadella’s previous position was Microsoft Corporation’s head of Cloud and Enterprise, and it is clear that his elevation has been fundamentally driven by a desire within Microsoft to compete with the top corporations within this strata. It is not exactly a secret that Microsoft’s core business model has been based around a technology which is threatened by the cloud, and evidently Nadella has been brought in to work out how the company can penetrate the cloud significantly in the future.

Certainly the appointment of Nadella is a significant gamble. Not only as he never run a business of this size before, or been in a remotely similar position, he’s never run a business of any size. Nadella joined Microsoft after a short period at Sun Microsystems, and his educational and work background is mostly technical in nature.

In many ways, the existence of the cloud is something of an inconvenience for Microsoft.

However, there is no doubt that Nadella has the technical and academic knowledge required for the role, having earned an MS in Computer Science from the University of Wisconsin–Milwaukee and an MBA from the University of Chicago Booth School of Business. Since then he has been intimately involved in Microsoft’s cloud efforts, so he has as good a grounding in the matter as one could reasonably ask for.

In many ways, the existence of the cloud is something of an inconvenience for Microsoft. Having dominated the operating system market for decades with Windows, and having a particularly strong position in the corporate sector, there was little incentive for one of the world’s biggest and most successful companies to significantly evolve. Without doubt, they would quite happily go on living in a world in which they can sell the Windows OS to people at $150+ a pop. Unfortunately for them, the cloud has rather complicated this business model, as many observers believe that physical hardware and operating systems being downloaded to all computer users’ physical machines will become less and less prevalent in the near future.

There has already been talk that in an attempt to respond to the present threats to its business that Microsoft will take a particularly radical approach to the forthcoming Windows 9, and actually offer it to consumers for free; aping the strategy of Apple with their Lion operating system.

Nadella has already made it clear in his early comments since taking the Microsoft CEO job that he fully recognises his role is one of evolving the company. His opening comments released to the press were all focused on the future direction of Microsoft, and how the company must ““continue to transform” and do so rapidly. There was also a noticeable emphasis on innovation, which will be absolutely essential for Microsoft going forward.

Currently, Amazon remains the dominant force in the cloud (IaaS & PaaS), and Microsoft is certainly playing catch-up attempting to get to the top of the industry. Microsoft are clearly investing a lot of time, money and energy into its Azure cloud system, and recently slashed storage prices related to it in an attempt to close the gap on Amazon Web Services. It was reported last year that Microsoft’s strategy was beginning to pay dividends, but for the time being Amazon continues to be dominant in the cloud sector.

It is an odd situation for a company such as Microsoft to be under serious threat, but the cloud certainly poses such a threat to their business and prominence. But with decades of experience of overcoming such challenges, don’t bet against them solving this problem.